Income inequality remains a major challenge in India

India's 1 pc rich hold 58 pc of the total wealth: Oxfam study

Business & Politics

News - Biz@India

January 16, 2017

/ By / Kolkata

Mukesh Ambani (USD 19.3 billion) is one among the top 57 billionaires in India

Mukesh Ambani (USD 19.3 billion) is one among the top 57 billionaires in India

India, with a population of over 1.26 billion, has emerged as a testimony to income and wealth inequality as per a recent study conducted by Oxfam India. The richest 1 pc in the country owns 58 pc of the total wealth in the country.

While 2016 remained an incredibly crucial year in the world’s economic paradigm making economic, political and social sectors increasingly interlinked, the World Economic Forum (WEF) in Davos, Switzerland is hosting world leaders and thought influencers to discuss the greatest risks for 2017 in the 47th annual meeting.

Even in the global perspective, the policy makers at the meeting observed that just 8 billionaires have the same amount of wealth as the poorest 50 pc of the world population. In India, the 57 top billionaires at the moment have a wealth (USD 216 billion) that is equivalent to the wealth of the bottom 70 pc of the country’s population. This is led by Mukesh Ambani (USD 19.3 billion), Dilip Shanghvi (USD 16.7 billion) and Azim Premji (USD 15 billion). The total wealth of the country stood at USD 3.1 trillion.

Inequality in income – Major Global Risk

The Global Risks Report 2017 has highlighted five key risk areas where global attention is required and each one of them has a crucial interpretation from India’s perspective. Firstly, economic growth and reforms over the years have reduced the inequality in the industrialised sectors; however between 2009 and 2012, the income of the top 1 pc in the US grew by 31 pc compared to 0.5 pc growth for the remaining 99 pc. As a global trend, inequality in income is growing as one of the most imperative issues in the world and even ahead of climate change, polarisation, cyber dependence and aging population.

India’s position in the scene of inequality is summarised in the report titled ‘An economy for the 99 percent’ by Oxfam and it aims at building an economy that benefits everyone, not just the privileged few. The report outlines how the richest 1 pc in India since 2015 has owned more wealth than the underprivileged population. “Over the next 20 years, 500 people will hand over $ 2.1 trillion to their heirs – a sum larger than the GDP of India, a country of 1.3 billion people,” Oxfam elucidated in the report.

Political risks last year also spurred crystallisation of equality in 2016. With the election of populist leaders, loss of faith in institutions and increased international strain – the political and the economic factors have converged with the social reasons. Predicting the shaping up of new risks and the means to tackle them would be the major challenge in India where the disparity of income has been so wide.

The Universal Basic Income (UBI) is one of the most critical issues in the world today and various economic forums with thought leaders have voiced their opinion about the same. The truth of the matter is that most of the capitalist social orders allocate a substantial segment of the financial yields to pay the individuals who have not worked for it. The UBI does not design automated revenue. It only proposes it out equally to everybody in the public arena, instead of sharing it equally among the wealthiest individuals in the society.

The words of Amartya Sen, the Nobel laureate from India who has been quite vocal about income inequality, finds relevance now and comes as a call for a broadening of the term ‘development’ beyond the current shallow focus restrained to economic measures such as per capita GDP and microeconomic measures.

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