India's rapidly increasing Income Inequality

By Shweta Arya

Eminent economists Lucas Chancel and Thomas Piketty have claimed that India is now seeing its highest 'income inequality' since 1922 - the year the Income Tax Act was passed.

This report is based on household surveys and tracking national accounts for the time period between 1922 and 2014.

The top 1 percent of the billionaires accounted for 29 percent of the economy's growth, out of which the 0.1 percent of the 1 percent accounted for 12 percent.

The bottom 50 percent, which accounted for 28 percent of economic growth in the 1951-1980 period, now accounts for only 11 percent of growth. The fact that billionaires are now contributing a major chunk of the economy's growth suggests that India is turning towards a 'trickle-down' like growth, that is, if the rich keep progressing, resulting in an overall growth of the economy, the bottom chunk of the population - middle-income earners and low-income earners - will benefit. Trickle-up economics, it's opposite says that the economy is pulled up by first looking after the poorer sections of the economy resulting in an overall growth.

The report suggests that India can promote more inclusive growth, thus suggesting more of a trickle-up like growth. Amartya Sen said, India's fast economic growth had helped in reducing absolute poverty, “but relative inequality has worsened." There is a need for more "more democratic transparency" so that the recorded tax statistics are available to concerned parties.