World Inequality Report 2022: India's top 1% population holds 22% of the national income; female labour income share is 18%

World Inequality Report 2022: India stands out as a 'poor and very unequal country', with an affluent elite as one-fifth of the national income is held by the top 1% of the population while only 13% is held by the bottom half of the population, according to World Inequality Report 2022. 

The World Inequality Report 2022 has been authored by Lucas Chancel who is the co-director of the World Inequality Lab and is coordinated by several experts including French economist Thomas Piketty.

World Inequality Report 2022 Highlights

1- As the top 1% and 10% hold 22% and 57% of the total national income respectively, the bottom 50% share has gone down to 13%. 

2- The report further underscored that the average national income of India's adult population is Rs. 2,04,200, while the bottom 50% earns Rs. 53,610 which means that the top 10% earns more than 20 times (Rs. 1,166,520).

3- India's middle class is relatively poor with an average wealth of Rs. 7,23,930, 29.5% of the tot5al national income. The average household wealth in India stands at Rs. 983,010.

4- The report pointed out that the gender inequalities in India are high. The female labour income share is equal to 18% (among the lowest in the world) which is significantly lower than the average in Asia, excluding China.

5- The bottom half globally owns almost nothing with just 2% of the global wealth while the top 10% of the global population owns 76% of the global wealth. 

The national average income levels are poor foreseers of inequality among high-income countries, some are very unequal (such as the U.S.), while others are relatively equal (Sweden). The same goes for low-income and middle-income countries, with some exhibiting extreme inequality (Brazil and India), somewhat high levels (China) and moderate to relatively low levels (Malaysia and Uruguay).

Income and wealth inequalities on the rise since the 1980s

The World Inequality Report 2022 highlighted that income and wealth inequalities have been on the rise globally since the 1980s. The deregulation and liberalisation policies implemented across the world have led to one of the most extreme increases in income and wealth inequality has been observed in the world.

Even after three decades of trade and financial globalisation, global inequalities remain extremely noticeable. The COVID-19 pandemic has exacerbated inequalities between the very wealthy and the rest of the population. However, government intervention in some countries have prevented a massive rise in poverty but this is not the case with the poor countries. 

A global income dip was noted in 2020 with 50% of the dip recorded in rich countries while the rest in low-income and developing nations. Even if the countries have become richer over the last 40 years their governments have become significantly poorer and the trend has magnified amid the COVID-19 pandemic because the government borrowed 10-20% of the GDP from the private sector. 

Timeline of income inequality in India

During 1858-1947 when India was under British colonial rule, the income inequality was very high with the top 10% income share around 50%. A significant reduction was noted at 35-40% post-independence due to the five-year plans. 

To better economic conditions in the country, India embarked upon deregulation and liberalisation policies which resulted in one of the most extreme increases in income and wealth inequality was noted. 

World Inequality Report 2022: What can be the way ahead?

Given the huge volume of wealth concentration, levying a modest progressive wealth tax on multimillionaires can help governments in generating revenues. With this, 1.6% of the global income can be generated and reinvested in education, health and ecological transition. 

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