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Context

According to a report commissioned by the South African Presidency of the G20, India's wealthiest 1% saw their wealth grow by 62% between the years 2000 and 2023.

Key Findings of the report on Global Inequality 

Global Wealth Concentration

• Globally, the richest 1% now own 43% of all global financial assets. (Source: Oxfam)
• Since 2020, the five richest billionaires' combined wealth has more than doubled, while nearly five billion people have become poorer. (Source: Oxfam)

Wealth Concentration In India

By 2022-23, the top 1% of the population controlled 40.1% of the nation's total wealth and captured 22.6% of the national income (Source: World Inequality Lab).

Global Food Insecurity

• Rising inequality directly impacts basic necessities. In 2023, nearly 2.4 billion people faced moderate or severe food insecurity, meaning they did not have access to adequate food (Source: FAO).
• Approximately 783 million people globally faced chronic hunger in the same year (Source: FAO, 2024).

How to measure inequality in wealth distribution?

The Gini Index is a statistical measure used to measure income or wealth distribution within a country or region.  

Scale: It ranges from 0 (or 0%), representing perfect equality (where everyone has the same income), to 1 (or 100%), representing perfect inequality (where one person has all the income).

Interpretation: A lower Gini index indicates a more equal distribution, while a higher index points to greater inequality.

India's Status: According to the latest Household Consumption Expenditure Survey (2023-24), Gini coefficient of consumption expenditure has declined to 0.237 in 2023-24 (from 0.266 in 2022-23) for rural areas and to 0.284 in 2023-24 (from 0.314 in 2022-23) for urban areas.

Key Factors Driving Global Inequality

Economic and Policy Factors

Financial Deregulation: Financial liberalization often causes market instability (eg. 2008 Global Financial Crisis) and speculative investments, benefiting asset owners (eg. bailout) over wage earners.  

Weakening Labour Protection: Declining union power and deregulated labor markets have curbed wage growth for low- and middle-income workers.

Privatisation of Public Services: Privatization of basic services like healthcare and education reduces accessibility and affordability for the poor.

International and Structural Factors

Global Tax System: Existing international tax rules have allowed Multinational Corporations and the ultra-rich to exploit tax loopholes and use tax havens, resulting in less government tax revenue available for social spending.

Unfair Trade and IP Regimes: Intellectual Property (IP) rules benefit corporations in developed nations, limiting access to essential technologies and medicines in the developing world.

Colonial Legacies: Historical colonial resource extraction and unequal economic structures still impact many developing countries in Africa. 

Consequences of Rising Inequality

Economic

India's "K-shaped recovery" sees the wealthy prospering while the bottom 50% of the population, holding 6.4% of the national wealth, faces stagnant wages and rising debt, resulting in weak mass-market demand.

Wealth concentrates in capital-intensive sectors like real estate, IT, and finance, benefiting a few urban middle-class, instead of job-creating manufacturing that could employ agricultural workers.

India faces extreme wealth inequality, with the top 1% holding over 40% of the national wealth (high Gini coefficient), associated with "jobless growth," where economic expansion fails to create enough jobs for most people. 

Social

High inequality leads to underfunded public health and education, as wealthier classes opt for private options.

Healthcare costs push around 63 million Indians into poverty each year. (Source: oxfam)

The COVID-19-driven shift to online education highlighted disparities: low-income students lacked access to necessary devices and the internet, exacerbating learning gaps. 

Political

Wealth concentration enables a small elite to influence policies (e.g., tax concessions), leading to self-serving outcomes and reduced government funds for social spending.

Way Forward for India to address inequality 

Implement Progressive Taxation

Shift tax reliance from regressive indirect taxes (like GST) to direct taxes (income, wealth, inheritance). Implementing an inheritance tax and wealth tax on the ultra-rich could boost revenue.

Enforce stricter measures to close corporate tax loopholes, ensuring high-profit companies pay their fair share, consistent with the global minimum tax goal; OECD's 15% global minimum corporate tax.

Strengthen Social Protection

Increase public spending on health (currently 1.9% of GDP) and education to 6%, as recommended by New Education Policy 20220.  

Expand and adequately fund the MGNREGA and urban employment guarantee schemes to provide reliable social safety nets and ensure minimum wages.

Reform labour laws to protect collective bargaining rights to give workers a fair share of the value they create.

Reform Global Financial Architecture

India, as a leading emerging economy and G20 member, must advocate increased voting power and better representation for developing nations in the IMF and World Bank.  

Regulate Corporations and Monopolies

Strengthen the Competition Commission of India (CCI) with strong antitrust laws to investigate and dismantle corporate monopolies and duopolies that harm competition, innovation, and consumers. 

Design specific regulations for digital monopolies and platforms to ensure fair market access and safeguard consumer data.

Enhance International Cooperation

Advocate at the World Trade Organization (WTO) for a permanent waiver of certain Intellectual Property (IP) rules (like the TRIPS agreement) for  life-saving medicines and green technologies.

Strengthen South-South cooperation (developing nations' collaboration) to share technology, expertise, and best practices for inclusive growth and climate resilience, reducing reliance on Western countries.

Conclusion

Reversing the extreme concentration of wealth through policy changes like progressive taxation and robust public services is essential for achieving the Sustainable Development Goals, especially SDG 10 (Reduced Inequalities), and building a sustainable and just future.

Source: ECONOMICTIMES