India’s top 10% own 63% of country’s wealth, bottom 50% own 5.3%: Oxfam report
India’s top 10% already held over half the country’s wealth (52%) in 1991, but the situation worsened further by 2012 with their share in total wealth rising to 63%, a new report from Oxfam India said.
In the same period, the share of wealth held by the bottom 50%, which was already low at 9% in 1991, fell to 5.3%.
Using a slew of national sample survey data sets and other sources, the report said the level of inequality prevalent in India is among the three worst in the world, with only Indonesia and the United States doing worse.
These findings using country-specific data sets generated by government agencies, in many cases closely mirror the broad findings of the World Inequality Report released last month, which used Credit Suisse’s income estimates for a range of countries across the world. The global report had estimated that India’s top 10% cornered 56% of the national income.
Since comprehensive, government-generated income data is not available for India, Oxfam’s report relies on a range of sample survey data sets to make inferences about inequality in consumption, income, and wealth (includes accumulated assets). On all three parameters, the level of inequality in India is the highest since independence, said Himanshu, an assistant professor at Jawaharlal Nehru University and author of the report.
Since 1993-94, the growth rate in monthly per capita expenditure, which is often used as a proxy to assess income and spending capacity, was not only faster in urban areas than rural areas, but the top 10% in urban areas grew the fastest, according to the report.
The growth of India’s economy, which had started witnessing an uptick in the 1980s, was also far more equitable in that decade, the report further stated. But since 1993-94, the consumption of the richest urban dwellers and the poorest rural dwellers has started showing a marked divergence.
The belief that inequality is an inevitable by-product of economic growth is not validated by the experience of many Latin American economies, the report added.
The report pointed out that the wealth of India’s billionaire club has increased by 10 times in the last decade. In the same period, the national per capita income only grew by two times, Himanshu said.
Among the billionaires, 40% had inherited their wealth and 43% had made their money in what the report described as “rent-thick” sectors like construction and natural resource extraction, sectors of the economy which have been prone to charges of crony capitalism.
“What is particularly worrying in India’s case is that economic inequality is being added to a society that is already fractured along the lines of caste, religion and gender,” Himanshu said. “Apart from being a moral concern, reducing inequality is central to the functioning of India’s democracy,” he said.
In terms of solutions to address the problem of inequality, the Oxfam report cited not only the progressive taxation policies recommended by economists like Thomas Piketty, but added that the most significant intervention could be the creation of more salaried, formal sector jobs. The World Bank too made a similar recommendation in a recent draft report.
“One of the most effective ways of achieving growth without compromising on the redistributive aspect of it has been employment generation, with a shift in the workforce structure towards formal and decent employment,” the report said.