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India’s economy contracted at a record 23.9% in the June quarter of FY21 (MINT_PRINT)
India’s economy contracted at a record 23.9% in the June quarter of FY21 (MINT_PRINT)

Piketty’s warning

While the pandemic shrank India’s economy and thus our average income, financial asset prices crashed at first and then soared on the back of global cash infusions by central banks

The wealth of nations is difficult to estimate. Unlike income, which is a flow, it’s a measure of accumulated value. Not all of it is liquid, and property valuations can vary wildly. So it need not surprise us that a data series tweak led to an upward revision of India’s estimated wealth per adult from $14,570 in June 2019 to about $17,300 by the end of that year, as put out by the latest Credit Suisse Global Wealth Report. More remarkable, perhaps, was its finding that we grew a tad wealthier over the covid-battered first half of 2020, with the country’s average adult wealth placed at $17,420 this June-end.

While the pandemic shrank India’s economy and thus our average income, financial asset prices crashed at first and then soared on the back of global cash infusions by central banks. Gold is up, too, but real estate remains in a slump. Even with only a tiny net gain in wealth, India’s drop in income would mean inequality has worsened since end-2019, when nearly three-fourths of our adults had less than $10,000 and 4,600 had over $50 million. As Thomas Piketty had warned, it seems to be getting harder for wage earners to catch up with asset owners.

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