Dharavi, one of Asia’s largest slums, in Mumbai., located alongside skyscrapers and luxury apartments
| Photo Credit: Reuters
In 2022, 22.6% of the national income went to the top 1% of Indians. Cut to 1951, their share in the income was only 11.5% and even lower in the 1980s — just before India opened up its economy — at 6%.
The share of the top 10% of Indians too had increased — from 36.7% of national income in 1951 to 57.7% in 2022.
On the other hand, the bottom 50% of Indians earned only 15% of the national income in 2022, compared with 20.6% in 1951. The middle 40% of Indians also recorded a sharp fall in their share of income from 42.8% to 27.3% in the period.
The gap between the rich and the poor has widened rapidly in the last two decades.
In 2022, the share of national income that went to the wealthiest 1% of Indians recorded a historic peak, higher than the levels seen in developed countries such as the United States and the United Kingdom. These are some of the conclusions of the recently released ‘Income and Wealth Inequality in India’ report published by the World Inequality Lab.
Chart 1 | The chart shows the income group-wise share in national income, and the adult population in each bracket as of 2022-23.
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Close to one crore adults were in the top 1%, ten crore in the top 10%, 36 crore in the middle 40% and 46 crore were there in the bottom 50% of the income pyramid.
Notably, about 10,000 richest Indians — the top 0.001% of the income pyramid — earned 2.1% of the national income. The top 0.01% and top 0.1% earned 4.3% and 9.6% of the national income respectively.
While income disparity has always existed in India, like in other economies, it was only in recent years, that the gap widened at a reckless pace (Chart 2).
Chart 2 | The chart shows the year-wise share of national income for the top 10%, the bottom 50% and the middle 40% of the population
To start with, in the 1950s and 60s, the income gap between the top 10% and the middle 40%, was negligible, across most years.
In the 1980s, even the bottom 50%’s share in national income increased marginally, to bridge the gap.
But post-liberalisation, in the 1990s, the income share of the top 10% skyrocketed, with the other two group’s share recording a steady fall. The curves continued on the same path in the 2000s and by the start of the 2010s, they settled and have hardly moved thereafter.
As for the top 1% of the population, their share in the national income in 2022 was higher than that of the richest 1% during colonial rule.
The top 1% earned an average of Rs. 53 lakh per year, 23 times more than the average Indian who earned Rs. 2.3 lakh, in 2022-23. The average income of the bottom 50% and the middle 40% stood at Rs. 71,000 and Rs. 1.65 lakh, respectively, in the same period.
Chart 3 | The chart shows the year-wise richest 1% of Indians’ share in the national income.
Just before independence, in the 1930s, the top 1%’s share of national income crossed the 20% mark. But after independence, with the princely States getting merged with Independent India, the share of the top 1% steadily declined, reaching close to the 6% mark in the 1980s.
Also read: The cold truth about India’s income inequality
However, post-liberalisation, their income share surged again and is presently hovering around the 22.5% mark, much higher than their share under British-rule.
Data shows that, while India’s income levels are not growing as fast as other comparable economies, their top 1%’s share in national income is higher than even advanced countries.
Chart 4 | The chart shows the income shares of the top 10% and top 1% in India, compared with other select countries in 2022-23.
In 2022-23, the income shares of India’s top 1% were above the levels recorded in the U.S., China, France, the U.K. and Brazil (Chart 4). Whereas, China and Vietnam’s average incomes grew at a much faster pace than India’s (Chart 5).
Chart 5 | The chart shows the year-wise average incomes in China and Vietnam as a percentage of India’s average income.
Source: ‘Income and Wealth Inequality in India’ report published by the World Inequality Lab
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