According to the recently released World Inequality Report 2022, India is now among the most unequal countries in the world. The report released by the World Inequality Lab, aims to promote research on global inequality dynamics. It report presents the most up-to-date synthesis of international research efforts to track global inequalities.
Distribution of Wealth in India
According to the report, the poorest half of the global population “barely owns any wealth” possessing just 2% of the total, whereas the richest 10% of the global population own 76% of all wealth. It has also highlighted that the Middle East and North Africa (MENA) are the most unequal regions in the world, whereas Europe has the lowest inequality levels.
In India, the report noted that there is a major gap in wealth distribution. The top 1% of the population hold more than one-fifth of the total national income in 2021 and the bottom half just 13%. The economic reforms and liberalization adopted by India have mostly benefited the top 1%.
The report says that the Average Household Wealth in the country stands at Rs. 983,010. It has been observed that the deregulation and liberalisation policies implemented since the mid-1980s have led to “one of the most extreme increases in income and wealth inequality observed in the world”.
Urban-Rural Gap: Poverty
According to the latest Multidimensional Poverty report by NITI Aayog, rural areas in India have not been recipients of fruits of development as much as the urban areas. The report is based on the National Family Health Survey (NHFS) 2015-16, while 25.01 per cent of the population was multidimensionally poor in the country, the poverty ratio was as high as 32.75 per cent in rural areas during that year. This is very steep as compared to 8.81 per cent of the population in urban areas.
The report has said that the pattern was the same in states and Union Territories in varying degrees – a greater proportion of the poor in villages than in urban areas.
Gender Inequalities
On a global level, Women’s share of total incomes from work (labour income) was about 30% in 1990 and is less than 35% now. Therefore, there has not been a significant rise in the overall share of incomes from women.
In India, the female labour income share is equal to 18% which is significantly lower than the average in Asia (21%, excluding China) and this value is one of the lowest in the world.
Rise of Private Wealth
There has been a rise of private wealth in emerging countries such as China and India, the report has highlighted. China has had the largest increase in private wealth in recent decades. The private wealth increase seen in India over this time is also remarkable (up from 290% in 1980 to 560% in 2020).
Recommendations by the Report
The report has suggested that the governments need to take steps to curb these inequality gaps by levying a modest progressive wealth tax on multimillionaires. Not only will this increase the income of the government but it will also help in the redistribution of wealth and provide social security for the people at the bottom of the wealth pyramid.
