800,000 super-rich Indians account for 8.6% of national income

From 1980 to 2014, the top 1 per cent captured 29 per cent of total growth, as much as the bottom 84 per cent put together.

Illustration: Uttam Ghosh/Rediff.com

Incomes of the super-rich in India are growing at a staggering pace. The share of the top 1 per cent in the national income rose to 21.7 per cent in 2013-14, finds a new study by economists Lucas Chancel and Thomas Piketty.

This is the highest level since the establishment of income tax in 1922.

The previous high was 20.7 per cent in 1939-40, prior to the second world war.

After this, the rich had seen in their share in total income dip, reaching a low of 6.2 per cent in 1982-83.

From 1980 to 2014, the top 1 per cent captured 29 per cent of total growth, as much as the bottom 84 per cent put together.

The income threshold to enter the top 1 per cent category was Rs 12.26 lakhs in 2014, while the average income of this group was Rs 30.9 lakhs which is about 22 times the national average.

Real incomes of this group have grown at an average of 6.7 per cent per annum from 1980 to 2014.

Digging a bit deeper, the economists find that the share of the super-super rich, the top 0.1 per cent, has risen to 8.6 per cent in 2013-14, up from a low of 1.7 per cent in 1982-83, with their real incomes growing at 7.92 per cent per annum over the past three and a half decades.

These 800,000 individuals who comprise the top 0.1 per cent, captured more growth (12 per cent) than the bottom 50 per cent put together (11 per cent).

This is significantly worse than the situation in China, though its better than the trend in the US.

Cumulatively, the top 10 per cent now account for a 55 per cent of all income. On the other hand, the share of the middle 40 per cent has fallen to a historic low of 29.6 per cent.

The deterioration in the distribution can be seen from the fact that in 2000, the top 10 per cent and the middle 40 per cent captured exactly the same amount of income.

The bottom 50 per cent, whose share had risen from 19 per cent in 1955-56 to a high of 23.6 per cent in 1982-83, now account for only 14.9 per cent of income in 2013-14.

Per capita incomes of the top 10 per cent grew at an average of 4.96 per cent per annum from 1980 to 2014, while those of the middle 40 per cent grew by 2.02 per cent, while the bottom 50 per cent was 1.94 per cent.