Context

According to a report titled as “Billionaire Raj” published by the World Inequality Lab (WIL), India’s top 1% will have the greatest income and wealth shares in history in 2022-23, at 22.6% and 40.1%, respectively.

• Four economics experts, Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi, created time series data on income and wealth inequality in India.

Key Highlights from the World Inequality Lab Report

• It claimed that the country had become more unequal than the British Raj.
• Findings of the Report: The top 1%‘ income and wealth shares in India reached their greatest historical levels in 2022-23, at 22.6% and 40.1%, respectively.
  • The paper stated that India’s top 1% income share is among the highest in the world, surpassing even South Africa, Brazil, and the United States.
  • India’s top 1% has a lower wealth share than South Africa and Brazil.
• Disparity among Income Groups: The paper also emphasizes the degree of difference between different economic classes.
  • According to the paper, the top 1% has an average wealth of Rs 5.4 crore, which is 40 times the average Indian.
  • However, the lowest 50% and middle 40% had Rs 1.7 lakh (0.1 times national average) and Rs 9.6 lakh (0.7 times national average), respectively.

Key Suggestions in the Working Paper

• Estimates from Multiple Sources: The paper’s estimates of income and wealth disparity are based on numerous sources.
  • There are no official income estimates or survey-based wealth data in India.
• Policy Recommendations: The research makes several policy recommendations to alleviate India’s inequality problem.
  • They include tax reform that takes into account both income and wealth, as well as broad-based public spending in health, education, and nutrition.
• Imposition of Super Tax: According to the research, a “super tax” of 2% on the net wealth of the top 167 families in 2022-23 would generate 0.5% of national income in revenue.
• • Benefit of Super Tax: It would also free up valuable fiscal space to support such expenditures, in addition to functioning as a weapon for combating inequality.

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