From British Raj to Billionaire Raj – The story of India's income inequality

The share of India's national income accruing to the top 1 percent income earners is now at its highest level since the creation of the Indian Income tax in 1922, a report said.

New Delhi: The share of India's national income accruing to the top 1 percent income earners is now at its highest level since the creation of the Indian Income tax in 1922, a new paper released by economists Thomas Piketty and Lucas Chancel showed.

A revised version of the report released on Tuesday titled 'Indian income inequality, 1922-2014: From British Raj to Billionaire Raj?' said, "The top 1 percent of earners captured less than 21 percent of total income in the late 1930s, before dropping to 6 percent in early 1980s and rising to 22 percent today."

The paper said that Income inequality reduced during the 1980s but soon after rose up again. “Post-2000 income growth has been substantially higher than in the previous  decades,” the report said.

Noting that average  annual real income growth was below 2 percent  in the 1960 and 1970s,the paper added that it reached 2.5 percent in the 1980s and 2 percent in the 1990s. Since  2000s it is of 4.4 percent on average since 2000.

The paper, however found that unequal growth dynamics over the period are not specific to India. “Income growth rises the higher up the income distribution one proceeds in China, in the USA and in France as well,” it said.  

“India's dynamics are, however, striking:  it is the country with the highest gap between the growth of the top 1 percent and growth of the full population. It is also interesting to note that bottom 50 percent of earners grew three times  more  slowly  in China than in India, the middle 40 percent six times more slowly than their Chinese counterparts, but that the incomes of those at the very top of the Indian have grown at a faster pace than in China,” the paper found.