Preventing Plutocracy In India – OpEd
India’s economic landscape has dramatically transformed in recent years, with a significant increase in the number of billionaires. According to the Hurun Research Institute’s 2024 global rich list, India now has 271 billionaires, with 94 joining the ranks in 2023 alone. This surge in wealth, however, has not benefited the broader population equally, leading to stark income inequality. A recent study by the World Inequality Lab, co-authored by renowned economist Thomas Piketty, reveals that India’s income disparity is now among the highest in the world, surpassing even countries like the United States, Brazil, and South Africa.
Inequality Through History
The study provides a sobering comparison to India’s colonial past. During British rule, the top 1% of India’s population controlled about 20-21% of the national income. Today, this figure has climbed to 22.6%. The disparity in wealth distribution is even more alarming, with the top 1% now holding 40.1% of the country’s wealth. These statistics indicate that income inequality in contemporary India is more pronounced than it was under colonial rule.
The dramatic rise in the number of billionaires from just one in 1991 to 162 in 2022 underscores the scale of wealth accumulation among the elite. This concentration of wealth among a small group of individuals highlights the growing economic divide in India. The collective wealth of these billionaires now constitutes nearly $1 trillion, or 7% of the world’s total wealth.
The Modern Bourgeoisie
The economic boom has created a class of super-rich individuals who wield significant power and influence. Dubbed the “Billionaire Raj,” this era is characterized by the concentration of wealth among a few individuals. Notable billionaires like Mukesh Ambani, Gautam Adani, and Sajjan Jindal are now among the world’s wealthiest, rubbing shoulders with global titans like Jeff Bezos and Elon Musk. The combined wealth of India’s billionaires is now nearly $1 trillion, accounting for 7% of global wealth. This concentration of wealth among a small elite has significant implications for Indian society. The economic power wielded by these billionaires gives them disproportionate influence over political and economic decisions, further entrenching their wealth and power. This creates a cycle where the rich get richer, and the poor find it increasingly difficult to improve their economic status.
Policy Implications
Since the Bharatiya Janata Party (BJP) assumed power in 2014, economic and political reforms have exacerbated inequality. The study argues that the centralization of decision-making power and the close ties between big business and the government have allowed the wealthy elite to exert disproportionate influence. This concentration of power has stifled equitable growth and increased economic disparity. The economic policies implemented by the BJP have often been criticized for favoring big businesses and the wealthy. Measures such as tax cuts for corporations, deregulation, and the privatization of public assets have disproportionately benefited the rich while providing little relief to the poor. Additionally, the focus on economic growth without adequate measures to address inequality has further widened the gap between the rich and the poor.
Public Investment as a Solution
The study’s authors suggest that globalization could benefit average Indians if the government invested more in public services like health, education, and nutrition. They propose a “super tax” of 2% on the net wealth of the 167 richest Indian families, which could generate revenues equivalent to 0.5% of the national income. These funds could be used to make essential public investments and promote more inclusive growth. Public investment in essential services is crucial for reducing inequality and promoting inclusive growth. Improving access to quality healthcare, education, and nutrition can help uplift the poor and provide them with the opportunities needed to improve their economic status. Moreover, investing in these areas can create a more skilled and healthy workforce, which can drive further economic growth.
The authors warn that without substantial policy changes, India risks moving towards a plutocracy. Historically, India has been a model for post-colonial nations in maintaining the integrity of key institutions. However, the recent decline in the quality of economic data used to study inequality is troubling. The study emphasizes the need to closely monitor and address income and wealth inequality to prevent further erosion of democratic values and ensure sustainable development. A plutocracy, where the wealthy elite hold significant power and influence over political and economic decisions, undermines the principles of democracy and equality. It can lead to policies that favor the rich at the expense of the poor and erode public trust in government institutions. To prevent this, it is essential to implement measures that promote transparency, accountability, and equitable distribution of wealth and opportunities.
India’s rapid economic growth and the rise of its billionaire class have led to increasing income inequality. The top 1% now holds a disproportionate share of the nation’s wealth, highlighting the urgent need for policy reforms. To address this issue, the government must prioritize public investments in health, education, and nutrition and consider implementing wealth taxes on the richest families. Without such measures, India risks undermining its democratic institutions and equitable growth, sliding towards a plutocracy. In conclusion, while the rise in the number of billionaires in India is often seen as a sign of economic success, it also highlights the growing income inequality in the country. Addressing this issue requires significant policy changes, including increased public investment in health, education, and nutrition, and measures to ensure more equitable distribution of wealth. By doing so, India can promote inclusive growth and prevent the erosion of democratic values and principles.
