The Weight of Income and Wealth Inequality in India: 1922-2014

Momi carries the weight of his 5 member family on monthly wages of Rs 9,500. What you and I spend on a dinner for 3 at the Oberoi.


With Sincere Apologies to the Crocodile

The line graph below is unusually poignant, the reptile opening wide its jaws as if waiting for unsuspecting prey to feed its insatiable appetite.

India’s Top 10% Rich Share in National Income

By 2014, the richest 10% of Indians owned 55% of national income, and the poorest 50% had dropped to 15%. Chancel & Piketty remind us that while the process of divergence of income (and hence wealth accumulation) of the ultra rich commenced during the reign of Rajiv Gandhi in 1984, this really took off after the ‘liberalisation’ of 1991 by Narasimha Rao that formally marked the end of India’s experiment with ‘Socialism’ and ‘freed’ large swathes of the economy from state control.

What ‘liberalisation’ really did was create very unequal access to opportunities for wealth creation for the already rich through a ‘deregulation’ processes skewed heavily in their favor, and spiralling corruption as the entire elite classes dipped their hands in the till.

To help us understand the depth of the systemic problem of massive and growing inequality in India, well known economists Chancel & Piketty have released, in July 2017, their insightful analysis of Indian data, with all the challenges of data integrity between income and consumption surveys of our government. This follows a similar 2005 report on Indian incomes by Banerjee & Piketty.

The data is electrifying, even to someone of my very limited knowledge of economics, and is a severe indictment of Indian society. The conclusion, all the more stark and powerful bereft as it is of any hyperbole : “Current income inequality in India is higher than during pre-independence period.” is a damning conclusion of Indians in every section of the ruling elite. The independence in 1947 from the mercantile and ruthless British was welcome, but not this wholesale submission to the evil genius of the unregulated market.

India’s Top 1% Rich Share in National Income

This inequality grows exponentially as we analyse the share of the super ultra rich in Indian national income – the top 1% of earners capture 22% of total income in 2014, up from a low of 6% in the early 1980s – this is “its highest level since the creation of the Indian income tax in 1922.

The focus of policy makers (bureaucrats, economists, politicians) – has been on GDP growth, or on growth of personal income, or on a reduction in poverty rates. While India has been successful in all of these measures, the dramatic rise of inequality of incomes since the mid-1980s has been hidden away from public gaze: the richest 1% of Indian went from 6.2% of national income in 1983 to 21.7% in 2014, the top 0.1% went from 1.7% in 1983 to 8.6% in 2014; and the ultra rich 0.01% went from 0.4% share of national income in 1983 to 3.8% in 2014.

What matters for social harmony, and is the greatest good of all, is the distribution of the wealth created in society, the growth of wealth simply cannot be an end in itself.

Total Growth Rates of Income Groups: 1980-2014

Figure 11 (above) compares four economies,very different in their structure and stage of economic and social evolution; but is very instructive in the sense that while it shows growth of inequality is endemic in the world India is worse off than the others – thpugh the USA competes effectively “income growth rates in India over the 1980-2014 period substantially increase as we progress upwards through the distribution of income….India’s is the country with the highest gap between the growth of the top 1% and growth of the full population. It is also interesting to note that bottom 50% of earners grew three times more slowly in India than in China, the middle 40% six times more slowly than their Chinese counterparts, but that the incomes of those at the very top of the Indian rich have grown at a faster pace than in China.”

Figure 12 (below) is equally eye opening: this shows the share of total national economic growth captured by different income groups … “the top 0.1% earners captured more total growth than the bottom 50% (12% vs. 11% of total growth) over the period. The top 0.1% of earners represented less than 800,000 individuals in 2013-14, this is equivalent to a population smaller to Delhi’s IT suburb, Gurgaon. It is a sharp contrast with the 389 million individuals that made up the bottom half of the adult population in late 2013. At the opposite end of the distribution, the top 1% of Indian earners captured 29% of total growth, as much as the bottom 84%”

Share of National Growth by different Income Groups: 1980-2014

The Stock of National Wealth is Terribly Unequal Too

There is thus growing inequality of income, which flows into ownership of wealth stored in capital and land. Amongst key middle-income nations ownership of total wealth, India is just behind warlord-capitalist Russia: an overwhelming 58.4% of wealth is owned by the richest 1% of Indians. As recently as 2010, the top 1% held a much lesser 40% of the wealth. Just 57 individual billionaires in India now possess wealth equal to the bottom 70% of India’s population: 900 million people. 57=900,000,000. Wow

Isn’t that enough of an unequal equation to urge one to thoughtful action?

Percent Share of Richest 1% in Total National Wealth


This post mainly consists of extracts from the July 2017 report “Indian income inequality 1922-2014: From British Raj to Billionaire Raj?“ Lucas Chancel & Thomas Piketty. July 2017. Full document here:

About Harsh Singh Lohit

Health, peace and harmony for all
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1 Response to The Weight of Income and Wealth Inequality in India: 1922-2014

  1. Sandeep Vij says:

    In a family, inequality of income amongst siblings often leads to jealousy, resentment, mistrust, anguish, prejudice, anger, hatred.. And this happens inspite of a qtr. century of bonding and sharing.
    It is inevitable that as inequality rises walls built on bitterness get stronger and taller… and any social unit that is built around resentment is ugly.


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