According to the latest data on global wealth from Credit Suisse, the richest 1 percent of Indians own 53 percent of the country’s wealth. Dwelling further into the report, one finds that the richest 5 percent own 68.6 percent of the country’s wealth, while the top 10 percent have 73.6 percent. The poorer half of the population, meanwhile, scrambles for 4.1 percent of the nation’s wealth. It is no secret that income inequality has been a burden to post-Independent India. However, what is truly a cause for concern today is that the share owned by the rich has steadily increased since the turn of the century. Data shows that India’s richest 1 percent owned just 36.8 percent of the country’s wealth in 2000, while the share of the top 10 percent was 65.9 percent. The unfortunate rise in income inequality grew during both the first National Democratic Alliance government from 2000-04 and consecutive United Progressive Alliance-led governments. The trend has not bucked under the current Narendra Modi-led ruling dispensation. For the first time since the dawn of economic liberalization, the share of the top 1 percent has crossed 50 percent. Moreover, the report goes on to state that India’s wealth increased by $2.284 trillion between 2000 and 2015, of which, the richest 1 percent has monopolised 61 percent of the wealth, while the top 10 percent bagged 81 percent. Meanwhile, the other 90 percent has been left to scramble for the leftovers. India’s perceived place as the world’s fastest growing economy means nothing if the country continues to witness such stark income inequality. The International Monetary Fund, probably the repository for neo-liberal economic thought, has itself admitted that a widening income gap between the rich and poor is bad for growth. In its report, economists in the IMF have dismissed “trickle-down” economics and said that if governments want to increase the pace of growth, they should concentrate on aiding the poorest of 20 percent of citizens. These figures present a unique challenge to the present government.
Admittedly, the Modi government has made great efforts to widen the scope of financial inclusion among the poor with bank accounts and a steady flow of government-sponsored pension schemes. However, its policies on public healthcare and education have been disappointing, with no real progress in these domains. Without a solid public health and education system, the poor’s ability to access wealth is significantly diminished. Studies have shown that disproportionate expenditure on health care is what drives a lot of poor Indians below the poverty line. Unfortunately, the Indian government’s expenditure on public health as a percentage of GDP remains one of the lowest in the world. The impact of income inequality is not just limited to growth, but to the very foundations of democracy. Angus Deaton, this year’s Nobel Prize winner in Economics once wrote, “The political equality that is required by democracy is always under threat from economic inequality, and the more extreme the economic inequality, the greater the threat to democracy. If democracy is compromised, there is a direct loss of wellbeing because people have good reason to value their ability to participate in political life, and the loss of that ability is instrumental in threatening other harm.” India needs to get its act together soon.