Indian Millionaires Up 20%, While 670 Million Indians’ Income Rises 1%

Two separate reports released this year capture the tragedy of modern India. One says that in 2017, the number of dollar millionaires increased by 20%, as did their wealth. ‘Dollar millionaires’ are those individuals who own wealth of more than one million dollars. The other report, released earlier this year says that 73% of the wealth generated in 2016-17 went to the richest one percent, while 67 crore Indians making up half of the country’s population saw a meagre one percent increase in their wealth.

The fact that there are two separate reports – one of the rich and one of the poor – is itself revealing of the deep divide in India. But setting that aside, lets look at what the revelations mean.

The millionaire report is part of a series of similar data laden reports put out by global financial firms, this latest one being from a French firm Capgemini. They calculate the dollar millionaires by prices of equities and real estate owned. In 2016, there were 219,000 such millionaires in India which increased to 263,000 in 2017, the report says. This happened because market capitalisation (market value of owned shares) went up by 50% and realty prices increased by about 5%, boosting their wealth. Boosted by these factors, and with continuing high income, total wealth owned by these millionaires crossed $1 trillion in 2017.

Another report by Credit Suisse, a Swiss investment bank, for 2017 had revealed that about 73% of wealth in India is owned by the richest 10% of the population. Within this bracket, the top 1% of Indians owned a staggering 45% of the country’s wealth.

All these reports are talking about wealth, that is, assets that are owned. It is possible to think – as some dreamers do – that wealth inequality can be overcome by trickle down and rising incomes. That’s your stereotypical rags to riches story multiplied a billion times for India.

Unsurprisingly, other reports, including the Oxfam report referred to above reveal that there is similar inequality in current incomes also. The richest one percent capturing 73% of the income that accrued in 2016-17 meant that their wealth went up by Rs 20,913 billion. This amount is equivalent to total budget of Central Government in 2017-18.

There is a very revealing trend if you look at several years of income data. Analysis has shown that since the onset of liberalisation, inequality of incomes has grown tremendously. Between 1988 and 2011, the incomes of the poorest 10% of Indians rose by 1% per year while the income of the richest 10% increased by 25% per year.

Thomas Piketty and his colleagues at the World Inequality Lab have shown that from about 36% share of national income in 1980, the top 10% has increased its share to over 50% by 2014. Since 2000, this increase is happening at an even faster rate. Within the top 10%, the extreme rich making up the top 1% are accumulating income and wealth at an even faster rate in the liberalisation era.

In short, the increase in millionaires is just the top of the pyramid whose vast base, deeply mired in poverty and deprivation, is increasing all the time. The reasons for this are not hard to find. A deliberate squeezing of both industrial and agricultural wages, increasing landlessness, increasing informalisation of relations, cuts in govt. expenditure on public investment and social welfare, lack of social security and ruinous integration with global markets are some of the key factors that have led to this situation. The past four years of Modi led BJP rule have seen an intensification of such policies resulting in further growth in inequality.

So, next time you read one of those celebratory headlines of how many millionaires or billionaires India has added, take a deep breath and spare a thought for the other 90% on whose backs these ‘High Net Worth Individuals’ are standing.