The article suggests that when considering the Indian income tax system through the prism of net wealth, it may be regressive........
Digital desk: Inequality in India has increased dramatically since the early 2000s, income and wealth share of the top 1% of the population rising to 22.6% and 40.1%, respectively, in 2022–2023.
According to the study "Income and Wealth Inequality in India, 1922–2023: The Rise of the Billionaire Raj", in terms of wealth concentration, the development of top-end inequality has been especially noticeable between 2014–15 and 2022–23.
The authors of the paper are Nitin Kumar Bharti (New York University and World Inequality Lab), Lucas Chancel (Harvard Kennedy School and World Inequality Lab), and Thomas Piketty (Paris School of Economics and World Inequality Lab).
India's top 1% income share is among the highest in the world—higher than that of South Africa, Brazil, and the US. "Between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration", mentioned in the report. The top 1% of income and wealth shares are expected to reach their greatest points in history by 2022–2023.
The article suggests that when considering the Indian income tax system through the prism of net wealth, it may be regressive. "A restructuring of the tax code to account for both income and wealth, and broad-based public investments in health, education, and nutrition are needed to enable the average Indian, and not just the elites, to meaningfully benefit from the ongoing wave of globalization," it noted.
According to the report, in addition to being an instrument for combating inequality, a 2 percent "super tax" on the net worth of the 167 wealthiest households in 2022–2023 would generate revenues equal to 0.5% of the country's income and free up significant fiscal space to support these kinds of expenditures.
India's economic data quality is noticeably low and has been declining lately. India appears to have one of the highest income shares in the world, "Behind only perhaps Peru, Yemen, and a couple of other small countries," according to the report on the top 1% of the population.
"In terms of top wealth shares, we see that both with top 10% and top 1%, India comes out in the middle of the pack, with Brazil and South Africa standing out with their extreme wealth concentration levels (85.6% and 79.7% top 105 shares, respectively)," the paper said.
The study observed that over the interwar years, the top 1% income share rose dramatically from 13% in 1922 to over 20%. The publication stated that following a brief increase during the 1950s, the top 1% income shares continuously decreased over the next two decades, reaching 6.1% by 1982, while experiencing a severe fall during the 1940s to return to 13% by the time of India's independence.
It stated that this was probably the result of the generally socialist policy agenda that the Indian government followed up until the 1980s. The report claims that the reduction in the top 1% of income shares stopped in the early 1980s when the Indian government started implementing a wide variety of economic changes, which eventually led to the liberalization in 1991.
According to the report, starting in the early 1990s, the top 1% income shares grew steadily over the following 30 years, hitting a record high of 22.6% in 2022. The wealth inequality dataset in the paper covers the years 1961–2023, but the authors were able to examine the changes in the top 1% income share across a century since they had access to tax tabulations dating back to 1922 when the British government passed the Income Tax Act.
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