WORLD INEQUALITY LAB REPORT 

• According to a recent paper from the World Inequality Lab, India's wealthiest 1% now holds record-breaking shares of both income and wealth, ranking among the highest globally. By the fiscal year 2022-23, the income share of India's top 1% stood at 22.6%, while their wealth share soared to 40.1%. Notably, India's top 1% income share surpasses that of countries like South Africa, Brazil, and even the United States.
• Addressing this disparity requires a restructuring of the tax system to consider both income and wealth, alongside significant public investments in healthcare, education, and nutrition.
• These measures are essential to ensure that all Indians, not just the privileged few, can truly benefit from globalization. Additionally, implementing a "super tax" of 2% on the net wealth of the 167 wealthiest families in 2022-23 could generate revenue equivalent to 0.5% of the national income, thereby creating fiscal room to support such investments while also combatting inequality
• According to the paper, addressing the imbalance in wealth distribution and ensuring broader benefits from globalization requires a reform of the tax system to consider both income and wealth.
• Additionally, significant public investments in healthcare, education, and nutrition are necessary to empower the average Indian citizen, not just the affluent, to derive meaningful advantages from global economic trends.
• Introducing a "super tax" of 2% on the net wealth of the wealthiest 167 families in 2022-23 could generate revenue amounting to 0.5% of the national income, thereby creating fiscal flexibility to support such investments and combat inequality.
• The paper utilized data extracted from annual tax reports published by Indian income tax authorities spanning from 1922 to 2020 to analyze the distribution of top income earners.
• Over time, the proportion of national income accruing to the top 10% declined from 37% in 1951 to 30% by 1982 before steadily rising again.
• Since the early 1990s, the share of the top 10% has notably increased, almost reaching 60% in recent years, while the bottom 50% received only 15% of the national income in 2022-23.
• On average, the top 1% earns Rs 5.3 million, which is 23 times more than the average Indian income of Rs 0.23 million. Meanwhile, the bottom 50% and middle 40% have average incomes of Rs 71,000 (0.3 times the national average) and Rs 1,65,000 (0.7 times the national average), respectively.
• The wealthiest 10,000 individuals out of 92 million Indian adults earn an average of Rs 480 million, which is 2,069 times the average Indian income.
• The paper highlights the extreme skewness in income distribution, noting that one would need to be at nearly the 90th percentile to earn the average income in India.
• In 2022, the top 0.1% of earners in India received nearly 10% of the national income, while the top 0.01% and top 0.001% received 4.3% and 2.1% shares of the national income, respectively.
• The paper suggests that factors such as wage growth in the public and private sectors, particularly until the late 1990s, may have contributed to the sharp rise in the income shares of the top 1%.
• Additionally, the paper attributes the sustained depression of income shares for the bottom 50% and middle 40% to the lack of quality, widespread education focused on the masses rather than just the elite

Inequality, whether it be income, wealth, or opportunity, arises from a complex interplay of economic, social, and political factors. Here are some key reasons for inequality:

• Education Disparities: Unequal access to quality education perpetuates inequality by limiting opportunities for socio-economic advancement. Individuals from disadvantaged backgrounds often lack access to quality schools, resources, and educational support systems, which can hinder their ability to acquire skills and secure well-paying jobs.

• Labor Market Dynamics: Disparities in wages and employment opportunities contribute significantly to income inequality. Factors such as technological advancements, globalization, and shifts in labor market demand can lead to job polarization, where high-skilled workers benefit from increasing demand and wages, while low-skilled workers face stagnant wages and job insecurity.

• Wealth Concentration: Wealth begets wealth through mechanisms like inheritance, asset appreciation, and investment income. Consequently, those who start with more wealth have greater opportunities to accumulate additional wealth, widening the wealth gap over time.

• Tax Policies: Tax systems can either mitigate or exacerbate inequality. Regressive tax policies that disproportionately burden low-income households, coupled with loopholes and tax evasion among the wealthy, can contribute to wealth concentration. Progressive tax policies that redistribute wealth and income through measures like higher taxes on the wealthy and targeted social spending can help reduce inequality.

• Social Mobility Barriers: Inequality is reinforced when social mobility is limited, meaning individuals' ability to move up or down the socio-economic ladder is constrained. Factors such as discrimination, lack of access to capital, inadequate social safety nets, and barriers to entrepreneurship can hinder social mobility, trapping individuals in cycles of poverty or privilege.

• Discrimination and Bias: Discrimination based on factors like race, gender, ethnicity, sexual orientation, and disability perpetuates inequality by limiting opportunities and access to resources for marginalized groups. Structural biases embedded within institutions and societal norms can also exacerbate disparities in income, wealth, and opportunity.

• Globalization and Trade Policies: While globalization can lead to economic growth and development, it can also exacerbate inequality within and between countries. Trade policies that prioritize corporate interests over labor rights and environmental protections can lead to job displacement, wage stagnation, and exploitation, particularly in developing countries.

• Political Influence: Economic inequality often translates into unequal political influence, as wealthy individuals and corporations wield disproportionate power through campaign contributions, lobbying, and other forms of political influence. This can result in policies that favor the interests of the wealthy and perpetuate inequality