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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.
