The return of India’s super rich: 

The return of India’s super rich

The trajectory of wealth concentration in the country, not just the levels of recently estimated inequality, is important.

Context:

  • High economic disparity among Indians

What are the reasons for high economic disparities?

  • A large informal labour force
  • Turbulent capital markets
  • Unequal access to education
  • Employment and mobility of workforce

What were the reasons of wealth concentration in the past?

  • Wealth concentration at the top is an entirely different concept that cumulates past prosperity and disparity through inheritance, income and monopoly rents.
  • Example: Indian has been home to extreme poverty as well as richest people:
  • In 1937, the nizam of Hyderabad was declared the world’s wealthiest person by Time magazine.
  • His wealth was estimated to be equal to around 30% of India’s gross domestic product (GDP).

Why is the computing wealth inequality in India harder?

  • The absence of similar tax-return data.
  • Issues of under-reporting

What were the steps taken after independence to reduce wealth concentration?

  • Old royal wealth was eliminated through the abolition of princely titles and annexation of private land into national wealth as part of Indian unification
  • A combination of Nehruvian socialism
  • Indira Gandhi’s nationalization
  • Progressive tax policies

What is the current trend?

  • The decline of income and wealth inequality between 1950-80; but no diffusion of prosperity
  • Due to emergence of new markets, promotion of private capital, modern investment, and market reforms made few Indians  
  • As India began to embrace the market, private capital adapted to more modern investments, and combined with market reforms, it made a select few enormously wealthy.These wealthy people are mainly leaders of the industries
  • Old wealth came to be replaced by more dynamic and financially savvy industrial wealth.

What is necessary to bring equitable growth?

  • India needs the effort to democratize economic resources to achieve equitable growth. Growth cannot be equitable if the superrich is able to accumulate wealth at even higher rates.
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