In recent years, India has experienced unprecedented economic growth, marked by a significant rise in the number of billionaires. According to the Hurun Research Institute’s 2024 global rich list, India now boasts 271 billionaires, with 94 new additions in 2023 alone. This meteoric rise in wealth has not been distributed equally among the population, leading to a dramatic increase in income inequality. A study by the World Inequality Lab, co-authored by renowned economist Thomas Piketty, highlights that India’s income disparity is now among the highest in the world, surpassing even the United States, Brazil, and South Africa.
The findings of the World Inequality Lab are particularly striking when compared to historical data. During British colonial rule, the top 1% of India’s population held about 20-21% of the national income. Today, this figure has risen to 22.6%. The gap in wealth distribution is even more pronounced, with the top 1% now controlling 40.1% of the country’s wealth. This stark inequality suggests that, by some measures, the economic disparity in modern India is worse than it was under colonial rule.
The rise in wealth inequality in India is part of a broader global trend where the rich are getting richer, and the poor are getting poorer. However, the situation in India is particularly concerning given the country’s historical context and the significant strides it has made in other areas, such as technological advancement and economic growth. The increase in the number of billionaires is often seen as a sign of economic success, but it also highlights the growing divide between the rich and the poor.
India’s rapid economic growth, with an 8% GDP growth rate according to Barclays Research, has not translated into equitable wealth distribution. The study describes the current era as the “Billionaire Raj,” where the wealthy elite have amassed significant power and influence. Prominent Indian billionaires like Mukesh Ambani, Gautam Adani, and Sajjan Jindal now rank among the world’s richest individuals, mingling with the likes of Jeff Bezos and Elon Musk. The collective wealth of Indian billionaires now constitutes nearly $1 trillion, or 7% of the world’s total wealth. This concentration of wealth among a small elite has significant implications for Indian society. The economic power wielded by these billionaires gives them disproportionate influence over political and economic decisions, further entrenching their wealth and power. This creates a cycle where the rich get richer, and the poor find it increasingly difficult to improve their economic status.
The rise in inequality has been particularly pronounced since the Bharatiya Janata Party (BJP) came to power in 2014. The study argues that the centralization of decision-making power and the growing nexus between big business and government have facilitated the disproportionate influence of the wealthy elite. This concentration of power has exacerbated economic disparity and hindered equitable growth. The economic policies implemented by the BJP have often been criticized for favoring big businesses and the wealthy. Measures such as tax cuts for corporations, deregulation, and the privatization of public assets have disproportionately benefited the rich while providing little relief to the poor. Additionally, the focus on economic growth without adequate measures to address inequality has further widened the gap between the rich and the poor.
The authors of the study argue that average Indians could benefit from globalization if the government made more substantial public investments in health, education, and nutrition. They suggest implementing a “super tax” of 2% on the net wealth of the 167 wealthiest Indian families, which could generate 0.5% of the national income in revenues. This additional revenue could create valuable fiscal space for necessary public investments. Public investment in essential services is crucial for reducing inequality and promoting inclusive growth. Improving access to quality healthcare, education, and nutrition can help uplift the poor and provide them with the opportunities needed to improve their economic status. Moreover, investing in these areas can create a more skilled and healthy workforce, which can drive further economic growth.
Without significant policy changes, the authors caution that India risks sliding towards plutocracy. Historically, India has been a role model among post-colonial nations for upholding the integrity of key institutions. However, the recent decline in the standard of economic data used to study inequality is concerning. The authors emphasize the importance of closely tracking and challenging income and wealth inequality to prevent further erosion of democratic values. A plutocracy, where the wealthy elite hold significant power and influence over political and economic decisions, undermines the principles of democracy and equality. It can lead to policies that favor the rich at the expense of the poor and erode public trust in government institutions. To prevent this, it is essential to implement measures that promote transparency, accountability, and equitable distribution of wealth and opportunities.
India’s economic growth and the rise of its billionaire class have come at the cost of increasing income inequality. The wealth divide in modern India is stark, with the top 1% holding a disproportionate share of the nation’s wealth. To address this issue, the government must prioritize public investments in essential services and consider implementing wealth taxes on the richest families. Without such measures, India risks becoming a plutocracy, undermining its democratic institutions and equitable growth. In conclusion, while the rise in the number of billionaires in India is often seen as a sign of economic success, it also highlights the growing income inequality in the country. Addressing this issue requires significant policy changes, including increased public investment in health, education, and nutrition, and measures to ensure more equitable distribution of wealth. By doing so, India can promote inclusive growth and prevent the erosion of democratic values and principles.