TAG: GS 3: ECONOMY
THE CONTEXT: The World Inequality Lab’s recent report, “Towards Tax Justice and Wealth Redistribution in India,” reveals a significant rise in economic disparities in India, highlighting the concentration of wealth among the upper castes and the widening gap between the rich and the poor.
EXPLANATION:
- This report underscores the deep-rooted caste-based inequalities in wealth distribution and the increasing economic divide.
Wealth Concentration Among Upper Castes
- The report indicates that nearly 90% of India’s billionaire wealth is controlled by the upper castes (UCs).
- Specifically, 88.4% of billionaire wealth is held by UCs, while the Scheduled Tribes (STs), among the most marginalized communities, have no representation among the country’s wealthiest individuals.
- This disparity is further emphasized by data from the All-India Debt and Investment Survey (AIDIS) for 2018-19, which shows that UCs hold nearly 55% of the national wealth.
- This stark contrast highlights the entrenched economic inequalities rooted in India’s caste system.
Caste and Economic Opportunities
- Caste continues to play a significant role in determining access to essential resources such as education, healthcare, social networks, and credit, all crucial for entrepreneurship and wealth creation.
- Historically, Dalits and other marginalized communities were restricted from owning land in many regions, severely limiting their economic progress.
- The “State of Working India, 2023” report by Azim Premji University also notes that Scheduled Castes (SCs) and STs are underrepresented as enterprise owners relative to their workforce participation.
- SCs constitute 19.3% of the workforce but only 11.4% of enterprise owners, while STs make up 10.1% of the workforce but only 5.4% of enterprise owners.
Wealth Inequality Beyond Billionaires
- Wealth inequality extends beyond the billionaire class.
- According to the National Family Health Survey, only 12.3% of SCs and 5.4% of STs are in the highest wealth quintile, while over 25% of SCs and 46.3% of STs fall into the lowest wealth category.
- The Other Backward Classes (OBC) community has 16.3% of its population in the lowest wealth category and 19.2% in the highest wealth category.
- These statistics underscore the pervasive economic disparities across different caste groups in India.
Historical Context and Current Trends
- India’s income and wealth inequality, which saw a decline post-independence, began to rise in the 1980s and has surged since the 2000s.
- Between 2014-15 and 2022-23, the increase in top-end inequality has been particularly striking, with the top 1% controlling over 40% of total wealth in India. This figure has increased significantly from 12.5% in 1980.
- The top 1% also earn 22.6% of total pre-tax income, up from 7.3% in 1980.
- This dramatic rise in inequality has led to the phenomenon known as the “Billionaire Raj,” where the economic divide in India has become more pronounced than during the British Raj.
Income and Wealth Distribution
- To join the top 10% of income earners in India, one needs to earn approximately Rs 2.9 lakhs per year, and Rs 20.7 lakhs to be in the top 1%.
- In stark contrast, the median adult earns only about Rs 1 lakh, while the poorest have virtually no income.
- The bottom 50% of the population earns only 15% of the total national income.
- In terms of wealth, an adult needs Rs 21 lakhs to be in the wealthiest 10% and Rs 82 lakhs to enter the top 1%.
- The median adult holds approximately Rs 4.3 lakhs in wealth, with a significant portion of the population owning almost no wealth.
- The bottom 50% holds only 6.4% of the total wealth, while the top 1% owns 40.1%.
- Notably, the top 0.001% alone controls 17% of the total wealth, meaning fewer than 10,000 individuals hold nearly three times the total wealth of the entire bottom 50% (46 crore individuals).
World Inequality Lab
- The World Inequality Lab (WIL) is a research center at the Paris School of Economics.
- The WIL aims to promote research on global inequality dynamics.
- It works in close coordination with a large international network of researchers (over one hundred researchers covering nearly seventy countries) contributing to the database.