The World Inequality Report 2022 has described India as a “poor and very unequal country with affluent elite.” According to the report the top 10% of Indian population holds 57% of the total national income. Throwing further insight into prevailing inequality in India, the report highlights that while top 1% of Indian population held more than 1/5th of national income or 22% while the bottom 50% held just 13% of total income in 2021. According to the report the global income dropped in 2020 with about half the dip taking place in rich countries and half in low-income and emerging countries. It attributes this primarily to the impact of “South and Southeast Asia, and more precisely” India. The report has attributed the fall in global income to the COVID- 19 pandemic, which affected the Indian economy severely and that impacted global income very adversely. It points out, “When India is removed from the analysis, it appears that the global bottom 50 per cent income share actually slightly increased in 2020.”
Global wealth was equal to around 510 trillion Euros in 2020, or about 600% of national income. The ratio of total wealth to total income rose from around 450% in the early 1990s to about 600% today. In high-income countries, in 1970, private wealth–national income ratios ranged between 200-400%. By 2008, when the global financial crisis began, these ratios averaged 550%. Large emerging economies such as China and India experienced faster increases than wealthy countries after they transitioned away from communism (in China and Russia) or from a highly regulated economic system (in India). In India, private wealth increased from 290% in 1980 to 560% in 2020.
The report also presents an assessment about the economic situation of the great Indian middle class. The report finds that India’s middle class is relatively poor with an average wealth of Rs 7,23,930, or 29.5% of the total national income, compared with the top 10% and 1% who own 65% (Rs 63,54,070) and 33% (Rs 3,24,49,360), respectively. However, according to the report the middle class average income was higher than an average income of an adult Indian. The average annual national income of the Indian adult population is Rs 2,04,200 in 2021. The bottom 50% earned Rs 53,610, while the top 10% earned over 20 times more (Rs 11,66,520), the report states. The average household wealth is Rs 9,83,010, of which the bottom 50% owns Rs 66,280, a mere 6%. The share of the top 10% and bottom 50% in pre-tax national income has remained broadly constant since 2014.
The report has also pointed out that in case of India the quality of inequality data released by the government has seriously deteriorated, making it particularly difficult to assess recent inequality changes. However, it is a subjective assessment. As per the recent Multi-dimensional Poverty Index prepared by Niti Aayog, one in every four people in India was multi-dimensionally poor. Bihar has the highest such proportion (51.91%), followed by Jharkhand (42.16%) and Uttar Pradesh (37.79%).
The report has also seen income distribution between the public and private sector. It finds that notwithstanding the fact that countries have become richer over the last 40 years, their governments have become significantly poorer. It also added that this trend was magnified due to the pandemic. “The share of wealth held by public actors is close to zero or negative in rich countries, meaning that the totality of wealth is in private hands. This trend has been magnified by the Covid-19 crisis, during which governments borrowed the equivalent of 10-20 per cent of GDP, essentially from the private sector.”
The report has also enquired about global inequality in terms of concentration of private wealth in population groups as well as regional inequality. According to it, the rise in private wealth has been unequal within countries and at world levels. Since the mid-1990s, the top 1% globally took 38% of all additional wealth accumulated, whereas the bottom 50 per cent captured just 2%. “The wealth of the richest individuals on earth has grown at 6 to 9% per year since 1995, whereas average wealth has grown at 3.2% per year. This increase was exacerbated during the COVID pandemic. The poorest half of the global population “barely owns any wealth” at just 2% of the total, whereas the richest 10% owns 76%. The richest 10% currently takes 52% of global income, and the poorest earns just 8%.
Inequalities within countries are now greater than those between countries. Within countries, the gap between the average incomes of the top 10% and the bottom 50% almost doubled from 18 times in 1820 to 41 times in 1910, reached an all-time high of 53 in 1980 and 50 in 2000, before declining to 38 in 2020. The report has also found that women today have a higher share in the global income than they had in the past. Women’s share of total incomes from work was about 30% in 1990, and is less than 35% now.
The report concludes that global inequalities seem to be about as great today as they were at the peak of Western imperialism in the early 20th century. According to the findings of the report, Europe has the lowest inequality levels while the Middle East and North Africa (MENA) are the most unequal regions in the world. In Europe, the top 10%’s income share is around 36%, and in MENA, it is 58%; in East Asia, it is 43%, and in Latin America, 55%. It notes that global income and wealth inequalities are “tightly connected to ecological inequalities and to inequalities in contributions to climate change”. The top 10% of emitters is responsible for close to 50% of all emissions, while the bottom 50% contributes 12%.