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Indian income inequality, 1922-2014: From British Raj to Billionaire Raj ?

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  • Chancel, Lucas
  • Piketty, Thomas

Abstract

We combine household surveys and national accounts, as well as recently released tax data in a systematic way to track the dynamics of Indian income inequality from 1922 to 2014. According to our benchmark estimates, the share of national income accruing to the top 1% income earners is now at its highest level since the creation of the Indian Income tax in 1922. The top 1% of earners captured less than 21% of total income in the late 1930s, before dropping to 6% in the early 1980s and rising to 22% today. Over the 1951-1980 period, the bottom 50% group captured 28% of total growth and incomes of this group grew faster than the average, while the top 0.1% incomes decreased. Over the 1980-2014 period, the situation was reversed; the top 0.1% of earners captured a higher share of total growth than the bottom 50% (12% vs. 11%), while the top 1% received a higher share of total growth than the middle 40% (29% vs. 23%). These findings suggest that much can be done to promote more inclusive growth in India. Our results also appear to be robust to a range of alternative assumptions seeking to address data limitations. Most importantly, we stress the need for more democratic transparency on income and wealth statistics to avoid another "black decade" similar to the 2000s, during which India entered the digital age but stopped publishing tax statistics. Such data sources are key to track the long run evolution of inequality and to allow an informed democratic debate on inequality.

Suggested Citation

  • Chancel, Lucas & Piketty, Thomas, 2017. "Indian income inequality, 1922-2014: From British Raj to Billionaire Raj ?," CEPR Discussion Papers 12409, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12409
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    References listed on IDEAS

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    1. repec:eee:deveco:v:127:y:2017:i:c:p:459-469 is not listed on IDEAS
    2. Facundo Alvaredo & Anthony Atkinson & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2016. "Distributional National Accounts (DINA) Guidelines : Concepts and Methods used in WID.world," Working Papers 201602, World Inequality Lab.
    3. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 1-41.
    4. Anthony Atkinson & Thomas Piketty, 2010. "Top Incomes : A Global Perspective," Post-Print halshs-00754875, HAL.
    5. Alvaredo, Facundo & Bergeron, Augustin & Cassan, Guilhem, 2017. "Income concentration in British India, 1885–1946," Journal of Development Economics, Elsevier, vol. 127(C), pages 459-469.
    6. Ashok Kotwal & Bharat Ramaswami & Wilima Wadhwa, 2011. "Economic Liberalization and Indian Economic Growth: What's the Evidence?," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1152-1199, December.
    7. Atkinson, A. B. & Piketty, Thomas (ed.), 2010. "Top Incomes: A Global Perspective," OUP Catalogue, Oxford University Press, number 9780199286898.
    8. Thomas Blanchet & Juliette Fournier & Thomas Piketty, 2017. "Generalized Pareto Curves : Theory and Applications," Working Papers 201703, World Inequality Lab.
    9. Anthony Atkinson & Thomas Piketty, 2007. "Top incomes over the twentieth century: A contrast between continental european and english-speaking countries," Post-Print halshs-00754859, HAL.
    10. Atkinson, A. B. & Piketty, Thomas (ed.), 2007. "Top Incomes Over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries," OUP Catalogue, Oxford University Press, number 9780199286881.
    11. Angus Deaton & Valerie Kozel, 2005. "Data and Dogma: The Great Indian Poverty Debate," World Bank Research Observer, World Bank Group, vol. 20(2), pages 177-199.
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    Cited by:

    1. Himanshu, 2019. "Inequality in India: A review of levels and trends," WIDER Working Paper Series wp-2019-42, World Institute for Development Economic Research (UNU-WIDER).
    2. Roy, Tirthankar, 2018. "Inequality in colonial India," Economic History Working Papers 90409, London School of Economics and Political Science, Department of Economic History.
    3. Sampreet Singh Goraya, 2019. "How does Caste Affect Entrepreneurship? Birth vs Worth," Working Papers 1104, Barcelona Graduate School of Economics.
    4. Motkuri, Venkatanarayana & Khan, Amir Ullah, 2018. "Macro Economy and Health in India," MPRA Paper 84512, University Library of Munich, Germany.
    5. Daniele Checchi & Andrej Cupak & Teresa Munzi & Janet Gornick, 2018. "Empirical challenges comparing inequality across countries," LIS Working papers 756, LIS Cross-National Data Center in Luxembourg.
    6. Varsha S Kulkarni & Raghav Gaiha, 2018. "Beyond Piketty: a new perspective on poverty and inequality in India," Global Development Institute Working Paper Series 332018, GDI, The University of Manchester.
    7. Edwin Fourrier-Nicolai & Michel Lubrano, 2019. "The Effect of Aspirations on Inequality: Evidence from the German Reunification using Bayesian Growth Incidence Curves," AMSE Working Papers 1914, Aix-Marseille School of Economics, France.

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