India’s top 1% holds 40% of total wealth, income share highest in over 100 years: World Inequality Lab

The top 1% of India’s population, categorised on the basis of their net worth, holds a total of 40.1% of the country’s total wealth, as per a research paper released by the Paris-based World Inequality Lab.

The share of income earned by the top 1% is 22.6%, which is the highest in over 100 years, said the paper, titled 'Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj'.

The income share of this segment of the population is among the highest in the world, and “even higher than South Africa, Brazil and the United States,” added the study which has been co-authored by economists Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi.

From 13% in 1922, the share of the top 1% increased significantly to over 20% in the inter-war period. It then fell dramatically during the 1940s to 13% again, by the time of India’s independence, the study said.

After briefly rising during the 1950s, the share of the top 1% consistently fell over the next two decades and reached 6.1% by 1982. This was likely the consequence of the broadly socialist policy agenda pursued by the Indian government till the 1980s, the study added.

“Since the early 1980s, when the Indian government began initiating a broad range of economic reforms leading up to the liberalisation in 1991, the decline in top 1% shares halted. From the early 1990s onward, top 1% shares have consistently increased over the next 30 years to reach an all-time high of 22.6% in 2022,” the World Inequality Lab stated.

Between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration, the research paper claimed.

Paper suggests tax system tweaks

According to the World Inequality Lab, their study found “suggestive evidence that the Indian income tax system might be regressive” when viewed from the lens of net wealth.

“A restructuring of the tax code to account for both income and wealth, and broad-based public investments in health, education and nutrition are needed to enable the average Indian, and not just the elites, to meaningfully benefit from the ongoing wave of globalisation,” it said.

Besides serving as a tool to fight inequality, a “super tax” of 2% on the net wealth of the 167 wealthiest families in 2022-23 would yield 0.5% of national income in revenues and create valuable fiscal space to facilitate such investments, it added.