Towards a less poor and more equal country

Context:

The World Inequality Lab's working paper titled 'Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj' highlights alarming levels of income and wealth inequality in India, posing significant challenges to economic growth and human development.

Income and Wealth Inequality Trends

• Income concentration: The working paper reveals that India's top 1% received 22.6% of the national income by 2022-23, the highest in a century, with the top 0.1% earning nearly 10%.
• Wealth concentration: Wealth concentration is stark, with the top 1% owning 40.1% of national wealth, while the bottom 50% and middle 40% witnessed declines in wealth share.
• Wealth inequality: Notably, India's wealth inequality, though not as extreme as Brazil and South Africa, has tripled since 1961, exacerbating income inequality.

Impact of Economic Reforms and Growth

• Impact on growth & poverty: Inequality began rising post-liberalization in the 1980s and accelerated after the 1991 economic reforms, undermining both growth and poverty reduction efforts.
• Economic inequality: India's growth trajectory, unlike China's, has been characterized by extreme economic inequality despite moderate growth rates.
• Importance of human development: States with sustained high growth rates, such as Kerala and Maharashtra, also exhibited advanced human development, emphasizing the importance of human development for inclusive growth.

Human Development Challenges and Policy Implications

• Challenges: Despite being the fifth-largest economy, India lags in human development, ranking below countries like Sri Lanka and Bangladesh.
• Required priorities: The focus on economic growth should prioritize human development to ensure inclusive growth, as economic inequality impedes overall progress.
• Need of more innovative schemes: Schemes like the Pradhan Mantri Garib Kalyan Anna Yojana, while providing short-term relief, are insufficient to address entrenched economic inequality and poverty.