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Income Inequality in India and Global Comparison

Context: In 2022, the top 1% of Indians held 22.6% of the national income, a stark increase from 11.5% in 1951 and 6% just before economic liberalisation in the 1980s.

Income Inequality in India

  • The top 10% of Indians saw their income share rise from 36.7% in 1951 to 57.7% in 2022.
  • Conversely, the bottom 50% of Indians saw their income share decrease from 20.6% in 1951 to just 15% in 2022.
  • The middle 40% of Indians experienced a decrease in income share from 8% to 27.3% over the same period.
  • The income gap in India has widened significantly over the last two decades, with the 1% richest Indians surpassing the income concentration levels of their counterparts in developed countries such as the USA and the UK.
  • Approximately one crore adults belonged to the top 1%, with the top 10% comprising ten crore adults.
  • The middle 40% included 36 crore individuals, and the bottom 50% consisted of 46 crore individuals.
  • The top 0.001% of India’s population, comprising about 10,000 individuals, earned 1% of the national income. The top 0.01% and 0.1% earned 4.3% and 9.6%, respectively.

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Income Disparity Trends Over Time

  • The income disparity accelerated post-liberalization in the 1990s, with the share of the top 10% climbing sharply and the other groups’ shares declining.
  • In 2022-23, the average income of the top 1% was ₹53 lakh per annum, which was 23 times the average income of ₹2.3 lakh for the average Indian.
  • The bottom 50% had an average income of ₹71,000, and the middle 40% had an average of ₹1.65 lakh.
  • After independence, the income share of the top 1% decreased, hitting around 6% in the 1980s, but post-liberalization, it surged to around 22.5%.

Global Comparison with India’s Income Levels

  • India’s top 1% held a greater share of national income in 2022-23 compared to the top 1% in the U.S., China, France, the U.K., and Brazil.
  • While India’s income levels have not increased as rapidly as some other economies, such as China and Vietnam, the income share of the top 1% in India has grown remarkably.

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