India, one of the world’s fastest-growing economies, is marred by extreme income inequality. Estimates by the senior economic analyst Aunindyo Chakravarty based on a study by the economist Thomas Piketty and his colleagues at the World Inequality Lab reveal a staggering reality: the top 0.5 percent of Indians, about 70 lakh individuals, earn as much as the poorest 80 crore people, accounting for 57 percent of the country’s population. The figures underscore the truth that India is an immensely unequal country.
Earlier in 2021, the World Inequality Lab in its report termed India as one of the most unequal countries in the world. At the time, the report said that the top 1 percent of India’s population earned more than one-fifth of the country’s total national income, while the bottom 50 percent made just 13.1 percent.
The disparity, according to Chakravarty, becomes more pronounced when we consider how India’s richest individuals fare compared to the wealthiest in developed capitalist nations. Strikingly, the richest 0.5 percent of Indians, earning the equivalent of $30,000 PPP per month, match the affluence of the top 10 percent in the world’s largest economy. In contrast, if we apply the same threshold to the UK and Germany, the combined top 4 percent of adults in these countries fall within the super-rich category.
To further grasp the extent of India’s income inequality, people in Burundi, the world’s poorest country, are as poorest as 58 crore Indians and once we expand the income threshold to the average level of Madagascar, 73 crore Indians fall below it
This should be a source of deep concern for the policy-makers. We remain a poor country despite being the fifth largest economy in the world with a $3.7 trillion economy. The government needs to ensure that this growth is equitable and percolates to the ground level. Eradicating poverty in India requires concerted efforts from all stakeholders. It necessitates a multi-pronged approach encompassing education, skill development, rural development, inclusive economic growth and social welfare. True, liberalization and privatization in early nineties played a critical role in unleashing India’s economy. But it is also true that the growth has become increasingly unequal as evidenced by the new estimates. This should jolt the union government to reform the economy. With millions of people mired in poverty, the fastest economic growth counts for little.
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