New Delhi: India’s richest 1% garnered as much as 73% of the total wealth generated in the country in 2017, according to a new survey by international rights group Oxfam. The report’s findings are in line with those of similar studies including the one published by renowned economists Lucas Chancel and Thomas Piketty last July, and give credence to the theory that the rich have disproportionately benefited from liberalisation while others have been left struggling.
Titled ‘Indian income inequality, 1922-2014: from British Raj to Billionaire Raj?’ the research paper by the two economists showed that income inequality in India was at its highest in 2014 since 1922, the year the country passed the Income Tax Act. The paper’s findings later went into a full-fledged report, the World Inequality Report, published by the World Inequality Lab. According to it, 10% of Indians garnered 56% of the national income in 2014.
The top 1% of earners captured less than 21% of total income in the late 1930s, before dropping to 6% in the early 1980s and rising to 22% in 2014, the report said.
The Oxfam report, which was released hours before the annual Davos World Economic Forum (WEF) meet began, further states that 67 crore Indians, comprising the population’s poorest half, saw their wealth rise by just 1% in 2017. The situation appears even more grim globally, where 82% of the wealth generated last year worldwide went to the 1%, while 3.7 billion people that account for the poorest half of population saw no increase in their wealth, the survey said.
The annual Oxfam survey is keenly watched and is discussed in detail at the World Economic Forum Annual Meeting where rising income and gender inequality is among the key talking points for the world leaders.
Last year’s survey had showed that India’s richest 1% held a huge 58% of the country’s total wealth – higher than the global figure of about 50%.
This year’s survey also showed that the wealth of India’s richest 1% increased by over Rs 20.9 lakh crore during 2017 — an amount equivalent to total budget of the central government in 2017-18, Oxfam India said.
The report titled ‘Reward Work, Not Wealth’, Oxfam said, reveals how the global economy enables wealthy elite to accumulate vast wealth even as hundreds of millions of people struggle to survive on poverty pay.
“2017 saw an unprecedented increase in the number of billionaires, at a rate of one every two days. Billionaire wealth has risen by an average of 13% a year since 2010 – six times faster than the wages of ordinary workers, which have risen by a yearly average of just 2%,” it said.
In India, it will take 941 years for a minimum wage worker in rural India to earn what the top paid executive at a leading Indian garment firm earns in a year, the study found.
In the US, it takes slightly over one working day for a CEO to earn what an ordinary worker makes in a year, it added.
Citing results of the global survey of 70,000 people surveyed in 10 countries, Oxfam said it demonstrates a groundswell of support for action on inequality and nearly two-thirds of all respondents think the gap between the rich and the poor needs to be urgently addressed.
With Prime Minister Narendra Modi attending the WEF meeting in Davos, Oxfam India urged the Indian government to ensure that the country’s economy works for everyone and not just the fortunate few.
It asked the government to promote inclusive growth by encouraging labour-intensive sectors that will create more jobs; investing in agriculture; and effectively implementing the social protection schemes that exist.
Oxfam also sought sealing of the “leaking wealth bucket” by taking stringent measures against tax evasion and avoidance, imposing higher tax on super-rich and removing corporate tax breaks.
The survey respondents in countries like the US, UK and India also favoured 60% pay cut for CEOs.
The key factors driving up rewards for shareholders and corporate bosses at the expense of workers’ pay and conditions, Oxfam said, include erosion of workers’ rights; excessive influence of big business over government policy- making; and the relentless corporate drive to minimise costs in order to maximise returns to shareholders.
About India, it said the country added 17 new billionaires last year, taking the total number to 101. The Indian billionaires’ wealth increased to over Rs 20.7 lakh crore – increasing during the last year by Rs 4.89 lakh crore, an amount sufficient to finance 85% of the all states’ budget on health and education.
It also said India’s top 10% of population holds 73% of the wealth – i.e. the stock of wealth, and not just wealth generated in a year – and 37% of India’s billionaires have inherited family wealth. They control 51% of the total wealth of billionaires in the country.
Oxfam India CEO Nisha Agrawal said it is alarming that the benefits of economic growth in India continue to concentrate in fewer hands.
“The billionaire boom is not a sign of a thriving economy but a symptom of a failing economic system. Those working hard, growing food for the country, building infrastructure, working in factories are struggling to fund their child’s education, buy medicines for family members and manage two meals a day. The growing divide undermines democracy and promotes corruption and cronyism,” she said.
The survey also showed that women workers often find themselves at the bottom of the heap and nine out of ten billionaires are men.
In India, there are only four women billionaires and three of them inherited family wealth.
“It would take around 17.5 days for the best paid executive at a top Indian garment company to earn what a minimum wage worker in rural India will earn in their lifetime (presuming 50 years at work),” Oxfam said.
Note: While Oxfam’s survey is based on data put out by Credit Suisse in 2017, they look at two different things. The Credit Suisse’s wealth book indicates that the top 10% of India’s richest owned 73% of the country’s wealth. Oxfam on the other hand, notes that the top 1% cornered 73% of the newly created wealth between/in 2017 and does not say that the 1% 73% of national wealth.