Indian income
inequality, 1922-2014: From British Raj to Billionaire Raj ?
By Lucas Chancel
& Thomas Piketty
Abstract. We combine household surveys and national accounts,
as well as recently released tax data in a systematic way to track the dynamics
of Indian income inequality from 1922 to 2014. According to our benchmark
estimates, the share of national income accruing to the top 1% income earners
is now at its highest level since the creation of the Indian Income tax in
1922. The top 1% of earners captured less than 21% of total income in the late
1930s, before dropping to 6% in the early 1980s and rising to 22% today. Over
the 1951-1980 period, the bottom 50% group captured 28% of total growth and
incomes of this group grew faster than the average, while the top 0.1% incomes
decreased. Over the 1980-2014 period, the situation was reversed; the top 0.1%
of earners captured a higher share of total growth than the bottom 50% (12% vs.
11%), while the top 1% received a higher share of total growth than the middle
40% (29% vs. 23%). These findings suggest that much can be done to promote more
inclusive growth in India. Our results also appear to be robust to a range of
alternative assumptions seeking to address data limitations. Most importantly,
we stress the need for more democratic transparency on income and wealth
statistics to avoid another "black decade" similar to the 2000s,
during which India entered the digital age but stopped publishing tax statistics.
Such data sources are key to track the long run evolution of inequality and to
allow an informed democratic debate on inequality.
Read more at:
Librarian
Rizvi Institute of Management
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