Inequality: income, wealth and opportunity

Inequality asks a different question from poverty. Poverty asks whether people have enough; inequality asks how the total is shared. A country can reduce poverty while inequality rises, if the rich gain faster than the poor. That is why both measures matter, and why growth alone cannot answer the question of fairness. India illustrates the point: absolute poverty has fallen on most measures, while income and wealth concentration at the top has risen.

The World Inequality Report 2022, from the World Inequality Lab, estimated that in 2021 the top 10 per cent of Indians held 57 per cent of national income and the top 1 per cent held 22 per cent, while the bottom half held about 13 per cent. Wealth was more concentrated still: the report estimated the top 10 per cent owning about 65 per cent of wealth and the top 1 per cent about 33 per cent. These are estimates built from tax data, surveys and national accounts, and they are contested — India's income-tax base is narrow and surveys understate top incomes — but the direction is consistent with other evidence of rising top shares since the 1990s.

Inequality is not only about income. Opportunity gaps matter as much: children born in different states, castes, communities and families face very different schools, health care, nutrition and networks. The Human Development Report 2025 noted that inequality reduces India's human development index value by 30.7 per cent, one of the highest losses in the region, when the index is adjusted for inequality. Gender adds another dimension: the World Inequality Report estimated women's share of labour income in India at only about 18 per cent, among the lowest in the world, reflecting both low participation and low pay.

Policy responses divide along familiar lines. Progressive taxation, inheritance and wealth taxes, and better public services are favoured by those who see inequality as a brake on growth and democracy. Others argue that taxing success discourages investment and that the priority should be expanding opportunity — schooling, health and jobs — rather than compressing outcomes. The evidence for civil studies is that both matter: transfers and services can soften inequality, but without broad-based job creation and asset-building, the top-heavy pattern tends to reproduce itself.