India has been constantly trying to combat the problem of poverty since its independence in 1947. A corollary of this problem is income inequality amongst the super rich, the rich, the middle class, and the poor. Since independence, inequality, the growing divide, between these groups has been on a rising trend. As more number of super-rich Indians make it to the global list, the poor keep getting poorer.
According to a survey conducted by Boston Consulting Group (BCG), the number of super-rich individuals in India tripled from 284 in 2013 to 928 in 2014. The country jumped from 13th position in 2013 to fourth position in 2014, in global rankings of countries in terms of the number of super rich. The BCG report stated that India would have the fastest projected growth rate – 21 per cent – between the years 2014 and 2019.
As of 2016, the top 1 per cent of the income pyramid holds 53 per cent of the total wealth of the country. The top 10 per cent holds a whopping 76.3 per cent of the country’s wealth, whereas only 4.1 per cent of the wealth is available to the poorer bottom-half of the pyramid. The gap between the rich and the poor has been rising drastically since 2000. Between 2000 and 2015, India’s wealth increased by $2.284 trillion, according to reports published by Credit Suisse. Of this, the super-rich 1 per cent took 61 per cent of the share, the 10 per cent rich consumed 81 per cent, and the remaining wealth was distributed amongst 90 per cent of the population.
In terms of consumption expenditure, money spent by the richest section of urban areas increased by 63 per cent whereas the increase was 33 per cent in the poorest section, between 2000 and 2012.
The growing divide between the rich and the poor will hinder the true economic growth of the country as a whole. Raghuram Rajan, former governor of the Reserve Bank of India (RBI) sees this as a dangerous trend. Rajan argues that since the rich spend a tiny portion of their income and the poor spend nearly all of their income, inequality might prove a major threat to aggregate demand in global economy.
