Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj

The report looks at tax tabulations starting from the year 1922 (the year of enactment of the Income Tax Act) to track the income share of the richest one per cent people in India. Their share of the total national income was around 13 per cent in 1922. A century later, it reached an all-time high of 22.6 per cent in 2022. It is noteworthy that the share had been declining between the 1950s and the early 1980s but started rising again after the economic reforms initiated thereafter, including liberalization.

Even within the richest one per cent, there was further concentration of income among those at the top end of the hierarchy. The share of the top 0.1 per cent, for instance, stood at 10 per cent of the overall national income in 2022. The respective figures for those at the top 0.01 per cent and 0.001 per cent people were 4.3 per cent and 2.1 per cent.

While the income share of the richest 10 per cent Indians was calculated to be 30 per cent of the national income in 1982, it reached nearly 60 per cent by 2022. In comparison, the share going to the next 40 per cent people was only 27.3 per cent. Interestingly, it was only in the 2000s that the share of the top 10 per cent started exceeding that of the middle 40 per cent. For instance, in the 1990s, the former group accounted for 33.5 per cent of the total income whereas the latter accounted for 44.1 per cent.

The average Indian earns around 0.23 million rupees per year, the paper states. The incomes of the richest 10,000 Indians are about 480 million rupees per year – 2,069 times that of the average Indian.

According to 2022-23 data, the average annual income of the poorest 50 per cent Indians is calculated to be around 71,000 rupees whereas that of the middle 40 per cent to be around 165,000 rupees.

The authors cite earlier research and upcoming World Inequality Lab papers to state that the lack of quality access to education and the service economy led growth post liberalization are important factors behind the income and wealth inequality in India. It refers to a 2022 paper titled ‘Intergenerational Mobility in India: New Measures and Estimates Across Time and Social Groups’ to note that intergenerational mobility has been low in India since the 1990s.

The paper notes that the growth rate of real incomes declined considerably between 2015 and 2020. The growth rate fell from six per cent in 2015 and 2016 to 4.7 per cent in 2017. It further fell to 4.2 per cent and 1.6 per cent in 2018 and 2019 respectively before the covid-19 pandemic in 2020 when incomes reduced by nine per cent.

According to Forbes billionaire data, between 1990 and 2022, the number of Indian individuals with a net worth of one billion US dollars or more rose from one in 1991 to 162 in 2022.

In 1961, the wealth share of the richest one per cent Indians was at 13 per cent from which it grew to around 39 per cent in 2023. Further concentration of wealth was found within the one per cent, with the top 0.001 per cent people accounting for 16 percentage points out of 39. The average wealth of the 10,000 richest individuals was about 16,763 times that of the average Indian.

When compared to countries like Brazil, China, France, South Africa, United Kingdom and the United States, the income share of the top one per cent in India is the highest at 22.6 per cent.

The report attributes the rise in the wealth share of the top 1 percent between 1961 and 2023 to the “financialization of wealth” in the period – the growing importance of activities like trading and investing in the economy.

Focus and Factoids by Nidhi Jha.