World Inequality Lab Report

What’s in Today’s Article?

• Why in the News?
• About World Inequality Lab
• Key Takeaways from the Working Paper Published by the WIL
• Key Suggestions in the Working Paper

Why in News?

According to a paper released by the World Inequality Lab, the shares of income and wealth of India’s top 1% at 22.6% and 40.1% respectively is at their highest historical levels in 2022-23.

About World Inequality Lab

• The World Inequality Lab (WIL) is a research center at the Paris School of Economics.
• The WIL aims to promote research on global inequality dynamics.
• It works in close coordination with a large international network of researchers (over one hundred researchers covering nearly seventy countries) contributing to the database.

Key Takeaways from the Working Paper Published by the WIL

• The working paper by four economics researchers – Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi – has created time series data on income and wealth inequality in India.
• Naming the paper, the “Billionaire Raj”, the authors claimed that the country was now more unequal than even the British Raj.
• As per the report, in the year 2022-23, top 1% income and wealth shares were at their highest ever historical levels in India: 22.6% and 40.1%.
• India’s top 1% income share is among the very highest in the world, higher than even South Africa, Brazil, and the US, the paper said.
  • The wealth share of the top 1% was lesser in India than in two of these countries: South Africa and Brazil.
• The paper also highlights the levels of disparity among different income groups.
• According to the paper, the top 1% holds an average of Rs 5.4 crore in wealth, 40 times the average Indian.
• However, the bottom 50% and the middle 40% hold Rs 1.7 lakh (0.1 times national average) and Rs 9.6 lakh (0.7 times national average) respectively.
• At the very top of the distribution, the wealthiest ∼ 10,000 individuals out of 92 million Indian adults own an average of Rs 2,260 crore in wealth, 16,763 times the average Indian.

Key Suggestions in the Working Paper

• The paper has used multiple sources to build its income and wealth inequality estimates.
  • India does not have official income estimates and survey based official statistics on wealth.
• The paper recommends multiple policy measures to address the problem of inequality in India.
• They include restructuring of the tax code to account for both income and wealth, and broad-based public investments in health, education and nutrition.
• The report said a “super tax” of 2% on the net wealth of the 167 wealthiest families in 2022-23 would yield 0.5% of national income in revenues.
  • It would also create valuable fiscal space to facilitate such investments, besides serving as a tool to fight inequality.

Q1) Who publishes the World Inequality Report?

The report is released by Paris-based World Inequality Lab, a global research initiative.

Q2) What do you mean by Income Inequality?

Income inequality refers to how unevenly income is distributed in a population. The less equal the distribution, the greater the income inequality.