Economic inequality has widened sharply in India in the post-Covid period. The top 1 per cent of the country’s population owns more than 40.5 per cent of total wealth in 2021 while the bottom 50 per cent of the population (700 million) has around 3 per cent of total wealth, according to a report by Oxfam International.
During the Covid-19 pandemic, which is considered one of the biggest crises humanity has faced, the wealth of the rich rose sharply while millions of people slipped below the poverty line.
The total number of billionaires in India increased from 102 in 2020 to 166 billionaires in 2022. The combined wealth of India’s 100 richest has touched $660 billion (Rs 54.12 lakh crore) – an amount that could fund the entire Union Budget for more than 18 months. The richest 21 Indian billionaires have more wealth than 700 million Indians.
Just five per cent of Indians own more than 60 per cent of the country’s wealth while the bottom 50 per cent of India’s population possess only three per cent of wealth, according to Oxfam India’s latest report “Survival of the Richest: The India story”.
India’s richest man has seen his wealth soar by 46 per cent in 2022. The report shows that a one-off 20 per cent tax on this billionaire’s unrealised gains from 2017–2021 could potentially raise Rs 1.8 lakh crores. This is enough to employ more than five million primary school teachers in the country for a year.
Oxfam India calls on the Union Finance minister to end this obscene inequality and implement progressive tax measures such as wealth tax in the upcoming Union Budget.
From 2012 to 2021, 40 per cent of the wealth created in India has gone to just one per cent of the population and only a mere 3 per cent of the wealth has gone to the bottom 50 per cent.
Oxfam India’s latest report which was released on the opening day of the World Economic Forum in Davos, Switzerland reveals that the total number of billionaires in India increased from 102 in 2020 to 166 billionaires in 2022. The combined wealth of India’s 100 richest has touched $660 billion (INR 54.12 lakh crore) – an amount that could fund the entire Union Budget for more than 18 months.
First, COVID-19 pandemic hit India which was already divided on the lines of caste, class, gender, and religion. Second, billionaires and corporates have benefitted from several crisis in India – be it COVID-19 vaccine, the war in Ukraine or rising inflation.
The Governments, business leaders, and billionaires celebrate India’s economic growth as extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years.
Among the increased number of world’s poor, 1/3rd are from India. The government must recognise this. The single most urgent and structural and strategic action that the Union Government must take now is —to put it clearly— to tax the richest. The revenue generated from this tax collection must be spent on universal healthcare, Right to Education and social protection for India’s informal sector workers. We can end Inequality in India with your help!
“While the country suffers from multiple crises like hunger, unemployment, inflation and health calamities, India’s billionaires are doing extremely well for themselves. The poor meanwhile in India are unable to afford even basic necessities to survive,” Amitabh Behar, CEO of Oxfam India, said in the report.
The number of hungry Indians increased to 350 million in 2022 from 190 million in 2018. The widespread hunger is resulting in 65 per cent of the deaths among children under the age of five in 2022, according to the Union Government’s submission to the Supreme Court.
“After witnessing mass suffering and death during the COVID-19 pandemic, it was critical that the Government of India took aggressive measures to address injustice and poverty. But it has unfortunately lost the plot. India is unfortunately on a fast track to becoming a country only for the rich,” Behar said.
While the poor face severe hardships, the wealth of the top 10 richest in India stands at Rs 27.52 lakh crore ($335.7 billion an increase of around $110 billion which is an 32.8 per cent rise from 2021). The wealth of the top 10 richest can finance the Ministry of Health and Family Welfare and Ministry of Ayush for more than 30 years or can finance India’s Union education budget for 26 years or can fund the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for 38 years!
Since 2020, the world’s richest 1% have captured almost two-thirds of all new wealth – six times more than the 7 billion people that make up the bottom 90% of humanity. Billionaire fortunes are increasing by $2.7 billion a day, even as inflation outpaces the wages of at least 1.7 billion workers, more than the population of India. Since 2020, for every dollar of new global wealth gained by someone in the bottom 90%, one of the world’s billionaires has gained $1.7 million.
India’s banking system demonstrates class bias when it comes to dealing with loan recovery. In Jharkhand, a 22-year-old pregnant woman was crushed under a tractor for not paying Rs 10,000 EMI. Instead of protecting poor and vulnerable from dangerous loan recovery tactics, the RBI withdrew its curbs on third party recovery agents. But in the same year, the loans written off by public banks reached Rs 11.17 lakh crore which are mostly given to corporates. Hardly 13 per cent of this massive amount has been recovered by the banks.
Over the last 40 years, governments across Africa, Asia, Europe, and the Americas have slashed the income tax rates on the richest. At the same time, they have upped taxes on goods and services, which disproportionately tax the poorest people and exacerbate gender inequality. In India, the report highlights how the Union Government continues to tax the poor and middle class more than the rich. Approximately 64 per cent of the total INR 14.83 lakh crore in Goods and Services Tax (GST), came from bottom 50 per cent of the population in 2021-22. As per estimates, 33 per cent of GST comes from the middle 40 per cent and only 3 per cent from the top 10 per cent. The bottom 50 per cent of the population pays six times more on indirect taxes as a percentage of income compared to the top 10 per cent.
While the poor in India continue to be taxed more, the rich benefit from tax exemptions. In 2019, the Central Government reduced the corporate tax slabs from 30% to 22%, with newly incorporated companies paying a lower 15% rate. The projected revenue foregone by the Union Government in 2020-21 in the form of incentives and tax exemptions to corporates was more than Rs 1,03,285.54 crores. This is the equivalent to the allocation towards Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for 1.4 years.
“The country’s marginalised – Dalits, Adivasis, Muslims, Women and informal sector workers are continuing to suffer in a system which ensures the survival of the richest. The poor are paying disproportionately higher taxes, spending more on essentials items and services when compared to the rich. The time has come to tax the rich and ensure they pay their fair share. We urge the finance minister to implement progressive tax measures such as wealth tax and inheritance tax which have been historically proven to be effective in tackling inequality,” Behar said.