While India is one of the fastest growing economies in the world, it is also one of the most unequal countries. Inequality has been rising sharply for the last three decades. The richest have cornered a huge part of the wealth created through crony capitalism and inheritance. They are getting richer at a much faster pace while the poor are still struggling to earn a minimum wage and access quality education and healthcare services, which continue to suffer from chronic under-investment. These widening gaps and rising inequalities affect women and children the most.
Let’s look at the numbers
– The top 10% of the Indian population holds 77% of the total national wealth. 73% of the wealth generated in 2017 went to the richest 1%, while 670 million Indians who comprise the poorest half of the population saw only a 1% increase in their wealth.
– There are 119 billionaires in India. Their number has increased from only 9 in 2000 to 101 in 2017. Between 2018 and 2022, India is estimated to produce 70 new millionaires every day.
– Billionaires’ fortunes increased by almost 10 times over a decade and their total wealth is higher than the entire Union budget of India for the fiscal year 2018-19, which was at INR 24422 billion.
– Many ordinary Indians are not able to access the health care they need. 63 million of them are pushed into poverty because of healthcare costs every year – almost two people every second.
– It would take 941 years for a minimum wage worker in rural India to earn what the top paid executive at a leading Indian garment company earns in a year.
Healthcare as a luxury good
While the Indian government barely taxes its wealthiest citizens, its spending on public healthcare ranks among the lowest in the world. In the place of a well-funded health service, it has promoted an increasingly powerful commercial health sector. As a result, decent healthcare is a luxury only available to those who have the money to pay for it. While the country is a top destination for medical tourism, the poorest Indian states have infant mortality rates higher than those in sub-Saharan Africa. India accounts for 17% of global maternal deaths, and 21% of deaths among children below five years.
Extreme wealth and extreme poverty
India is a country of extreme contrasts: there are booming centres like Mumbai, Delhi and Bangalore, with a growing number of enormously rich families, but there are also millions of people living in extreme poverty. Some 15 per cent of Indians are undernourished. One in three children under the age of five is stunted as a result of chronic undernutrition. Child mortality is higher in India than in its neighbours Nepal and Bangladesh, both of which are counted among the least developed countries (LDCs) in the world. The 2022 Global Hunger Index describes the situation in India as “serious”.
Public spending on education and health is still insufficient to meet the needs of the entire population. The quality of the services offered is often still inadequate. There are also shortcomings in the country’s infrastructure. A large proportion of the population have no or only inadequate access to basic services like water and sanitation, decent housing, waste disposal and transport. For example, about 30 per cent of India’s people do not have their own toilet.
India’s population has almost doubled over a period of 40 years. About a quarter of Indians are younger than 15 and nearly 45 per cent are younger than 25 years of age. This demographic development offers huge opportunities for economic growth and increased incomes – but only if India manages to actually make use of this potential by providing more education and more employment.
Right now almost 90 per cent of workers are employed in the informal sector, which means that they are not able to get occupational health insurance or any kind of wage compensation when they fall ill. Only a very small percentage of them are able to afford treatment by doctors outside the at times patchy basic health services provided by the public health system. There is also a lack of high-quality vocational training programmes that are accessible for all population groups and also have social recognition.
India among top countries with high income, wealth inequality: UNDP report
India has emerged among top countries with high income and wealth inequality but the share of the population living in multidimensional poverty fell from 25 to 15 per cent between 2015-16 and 2019-21, the UNDP said in a report.
The 2024 Asia-Pacific Human Development Report, launched on Monday, paints a qualified picture of long-term progress but also persistent disparity and widespread disruption, foreseeing a turbulent development landscape and urgently calling for new directions to boost human development.
This persistent wealth divide is driven by various factors. Globalization and technological advances have, for example, created new opportunities for some groups while leaving others behind. This typically results in the owners of capital getting a greater share of national income.
ILO data show, for example, that in Asia and the Pacific labour has a lower income share than the world average.13 As a result, workers have less income to save and invest, further worsening inequality. The most vulnerable in this vicious feedback loop include those working in the informal sector, particularly women. Inequality is further exacerbated by corruption, and weak tax policy and administration, as well as by the lack of effective social safety nets.
In India, between 2000 and 2022, per capita income soared from $442 to $2,389. And between 2004 and 2019, poverty rates (based on the international poverty measure of $2.15 per day) plummeted from 40 to 10 percent. Moreover, between 2015-16 and 2019-21, the share of the population living in multidimensional poverty fell from 25 to 15 percent.
Despite these successes, poverty remains persistently concentrated in states that are home to 45 percent of the country’s population but contain 62 percent of its poor. In addition, many other people are very vulnerable, hovering just above the poverty line. The groups at greater risk of falling back into poverty include women, informal workers, and inter-state migrants. Women are only 23 percent of the labour force.
Amidst rapid growth but persistent disparity, the income distribution has become more skewed. The top 10 percent of the population get 57 percent of national income and the top 1 percent get 22 percent – one of the most unequal income distributions. There are similar gaps in wealth: the top 10 percent of the population controls 65 percent of the nation’s total wealth. There is growing evidence of a strong rise in wealth inequality, mainly in the post-2000 period.
Titled ‘Making our Future: New Directions for Human Development in Asia and the Pacific’, the new report argues that unmet aspirations, heightened human insecurity, and a potentially more turbulent future create an urgent need for change.
Moreover, between 2015-16 and 2019-21, the share of the population living in multidimensional poverty fell from 25 to 15 per cent.
Despite these successes, poverty remains persistently concentrated in states that are home to 45 per cent of the country’s population but contain 62 per cent of its poor, the report pointed out. “In addition, many other people are very vulnerable, hovering just above the poverty line. The groups at greater risk of falling back into poverty include women, informal workers, and inter-state migrants,” the United Nations Development Programme (UNDP) said in its report.
Noting that women are only 23 per cent of the labour force, the report said that amidst rapid growth but persistent disparity, the income distribution has become more skewed.
“There is growing evidence of a strong rise in wealth inequality, mainly in the post-2000 period,” it said.
The report also pointed out that India is contributing significantly to the growth in the global middle class-encompassing those living between USD 12 and USD 120 a day. India is expected to contribute 24 per cent to the global middle-class growth (192 million people), it said.
While the Asia-Pacific region will account for two-thirds of global economic growth this year, income and wealth disparities are worsening, particularly in South Asia, where the wealthiest 10 per cent control over half of total income, the report said.