Rich Indians Own 40% of Wealth as Inequality Widens Under Modi

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India’s inequality gap has widened sharply under Prime Minister Narendra Modi’s decade in power, with the richest 1% of the population now owning 40% of the country’s wealth, a new study found.

The top 1%, or about 9.2 million people, earn 22.6% of total income — the highest share since data going back to the 1920s — and hold more than 40% of the wealth in the world’s fifth-largest economy, according to a study by economists, including renowned inequality expert Thomas Piketty. The growth mainly came at the expense of the middle class, they said.

“The ‘Billionaire Raj’ headed by India’s modern bourgeoisie is now more unequal than the British Raj headed by the colonialist forces,” the authors wrote. They warned that further divergence in inequality may fuel social unrest in the country.

The inequality gap widened after the economy’s opening up in the early 1990s, but “between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration,” the researchers said.

The period coincides with Prime Minister Narendra Modi’s accession to power and the growth of India’s billionaire class led by Mukesh Ambani and Gautam Adani. India’s opposition parties have long accused the Modi government of ‘crony capitalism’ and favoring certain businesses in government contracts.

The researchers said the Modi years also saw a steady decline in overall income growth as savings and investment rates fell for over a decade until 2017-18, and exports declined.

Based on figures from the World Inequality Database, India’s income inequality is among the very highest in the world, behind only Peru, Yemen and a few other small countries, the authors said. India ranked in the middle of the pack in terms of wealth share, with Brazil and South Africa topping the list.

“In the post-liberalization years of high growth and rising inequality, the middle class (middle 40%) appears to have lost out significantly,” the researchers said. Between 1961 and 1981, the middle class and richest 10% had nearly identical share in wealth. But over the next three decades, the share of the top 10% pulled ahead while the middle 40% consistently fell to reach 31% by 2012 to 29% by 2023.

The inequality gap could be starker than captured in the study as the quality of available data remain “notably poor” in India, and has seen a further deterioration in recent years, the researchers said.

“We call for improved access to official data and greater transparency to enhance the study of inequality and enable evidence-based public debates.”

The inequality gap will likely not close on its own without policy intervention, the researchers said, suggesting imposing a “super tax on Indian billionaires and multimillionaires, along with restructuring the tax schedule to include both income and wealth.” That could be then used to finance major investments in education, health and other public infrastructure, they said.

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