Study throws light on rising wealth & consumption inequality in India

Wealth and consumption inequality in India is rising, with the gap between the forward and other castes becoming wider over the years, according to a World Inequality Database study supervised by Thomas Piketty, an expert on wealth and income gaps.

The author, Nitin Kumar Bharti of the Paris School of Economics, has estimated that the wealth share of the rich—top 10% of the population—has risen from 45% in 1981 to 68% in 2012. Moreover, the historical inequality in wealth distribution along caste lines has not been corrected even though the situation of every caste has improved over time. Sourabh Gupta takes a look...

Economic ranking mirrors caste hierarchy

SC/STs way below overall average; OBC/Muslims closer to overall average but lower than FCs. 50% Brahmins, 31% Rajputs, 44% Bania & 57% Kayasth fall in richest class. Only 5% ST, 10% SC,16% OBC,17% Muslims in the richest category.

Wealth heavily concentrated at the top
Top 1% of population own 30% of total wealth which is 50% of total wealth of top decile. Bottom 50% of the population own 8% of total wealth which highlights ‘weak base’ of society. Middle 40% own 35% of total wealth.

Spending gap is also widening
Top 10% consume 28-32% while consumption share of bottom 50% is around 21% and of middle 40%, the share is around 40%. In comparison with wealth share of top 10%, consumption distribution is more equitable.

Forward castes dominate top 10%
Lower population share of SC/ST/Muslims in higher/middle wealth deciles and higher population share in lower wealth deciles. OBCs are distributed in the same share across all wealth deciles. FCs over-represented in higher deciles.

Inequality within castes themselves has increased
Within castes, share of top 10% is over 45%. FCs show highest inequality, pointing towards heterogeneity within this caste group & explains the demand for reclassification by some upper castes into OBCs to avail reservation benefits.

NOTE: Five caste groups defined in the working paper are: SC, ST and OBC (irrespective of religion);
FC (forward castes) who are Hindus but not classified as SC/ST/OBC; and Muslims who are not under SC/ST/OBC category
SOURCE: Wealth Inequality, Class and Caste in India, 1961-2012 (Supervisor: Professor Thomas Piketty; Referee: Professor Abhijit Banerjee)
Sources used in the paper: NSS-AIDIS, NSS-Consumption Surveys, IHDS, NFHS and millionaires’ lists