India’s top 10% reach highest wealth level
The World Inequality Report 2022 shows that the richest in India increased their share of wealth in 2021 by a historic degree.
The Covid-19 pandemic inflicted unprecedented damage to economies across the globe. While a recovery is underway, it is not necessary that both the rich and the poor will recover equally. The World Inequality Report 2022, released on December 7, shows this is indeed the case. Apart from wealth, it tracks other inequalities that have become important in today’s world, such as that in greenhouse gas emissions.
The report, produced by the World Inequality Lab hosted at the Paris School of Economics and the University of Berkeley, California, shows that the richest in India increased their share of wealth in 2021 by a historic degree. It also shows that women in India have a much lower share in labour income compared to their global peers.
Share of bottom 50% in India’s wealth is the lowest ever
In 2021, the average household wealth in India was ₹983,010 per adult, according to the report. However, this figure is driven by some of the wealthiest people in India. The top 10% owned assets worth ₹6,354,070 on average ( ₹63.5 lakh, and the top 1% own ₹324.5 lakh on average), which is 96 times more than the bottom 50% ( ₹66,280). As these numbers suggest, private wealth is concentrated in the hands of a few in India. In 2021, this concentration became more pronounced. The top 10% had a share of 64.64% in total household wealth, the highest since 1995, the earliest year for which this data is available. The share of the bottom 50% decreased to its lowest levels since 1995 to 5.9%. In 2020, the share of the top 10% was 63.94%, in 2019, 64.05%. And the share of the bottom 50% in 2020 was 6.02%, and in 2019, 6%.
To be sure, this trend was not unique to India. Billionaires (individuals owning at least $1b in nominal terms) increased their share in total household wealth of the world from 2.20% in 2020 to 3.34% in 2021. This 52% increase in share is the highest since 1996. The top 0.1% registered an 8.3% growth – 4th highest since 1996 – in their share to amass 11.11% of the world’s household wealth. The entry threshold of top 0.1% was €693,000 (PPP) in 1995 and is €16,666,000 today.
Income inequality in India is as high as it was under British colonial rule
Wealth represents assets minus debts at a point in time. Income is the money that a person receives in an interval, such as wages. According to the report, income inequality is generally less than wealth inequality. For India, it estimates that the top 10% earners make 20 times ( ₹1,166,520) as much as the bottom 50% ( ₹53,610).
In terms of concentration, the top 10% accounts for 57.1% of the income now, while the bottom 50% receive only 13.1%. To be sure, the top earners have not achieved this level of concentration in a linear fashion. In colonial times, their share was around 50%, but started decreasing after independence, reaching a low of 30.9% in 1982, before it started increasing again. “After independence, socialist-inspired five-year plans contributed to reducing this share to 35-40%. Since the mid-1980s, deregulation and liberalisation policies have led to one of the most extreme increases in income and wealth inequality observed in the world,” the report says.
To be sure, these figures are not the most recent and have not changed in the dataset since 2014. “Over the past three years, the quality of inequality data released by the government has seriously deteriorated, making it particularly difficult to assess recent inequality changes,” the report adds.
Indian women’s share in labour income is much less than their global peers
The World Inequality Report 2022 also estimates gender inequality in global earnings. The earnings estimated for this only take into account labour income, or wages and salaries and labour share of self-employment income. This shows that women received only 18.3% of the labour income in 2020 in India. This is almost half the share that accrued to women in other developing economies such as Brazil (38.5%) and China (33.4%), as well as the global average (34.70%). Among different regions of the world, Indian women’s share in earnings comes close to the proportion in MENA (Middle East and North Africa) . Women’s share in labour earnings in India has also grown at a slower rate between 2010 and 2020 (19% increase) than between 2000 and 2010 (36% increase).
Inequalities in GHG emissions are not just a rich and poor country issue
The climate crisis caused by global warming is one of the great 21st century challenges. It has also brought forward another dimension of inequality: ecological inequality. One of its forms is the differences in greenhouse gas (GHG) emissions across the globe. In climate negotiations, for example, developing and under-developed countries ask for fewer curbs on their emissions because they have contributed less historically to the stock of GHGs in the atmosphere. The World Inequality Report, however, shows that emissions are not necessarily a rich and poor country issue.
The richest within different countries emit disproportionately more. India’s top 10% emits 9 times as much GHG per capita as the bottom 50%, although it is still less than all major regional averages. On the other hand, even the poor in some country might emit more than the rich in another. The bottom 50% in North America, for instance, emits 9.7 tonnes of CO2 equivalent per capita per year. This is similar to the 10.6 tonnes of CO2 equivalent emitted by the middle 40% in Europe per capita per year.