The proof behind India’s rising income inequality

India’s top 5% today earn as much as the remaining 95% combined

is no evidence of India’s inequality and that, all past findings are unreliable since they are based on consumption data and not income data.

Most of these narratives suffer from cognitive dissonance and rigid economic dogma. I have shown in my recent work using corporate wage distribution data that income inequality is equally high between top executives and the average worker in corporate India. This notion that there is no concrete evidence for high and rising income inequality in India is nonsensical.

There can, of course, be differing opinions on the causes of such high income inequality and policy measures needed to tackle them. But it is entirely foolhardy to believe that inequality is either not high or not rising rapidly or is not a problem in India.

The stubborn few may still contest these findings from the CBDT dataset on grounds that this data represents only 50 million Indians and not the entire population. These 50 million taxpayers are presumably among the highest income earners in India. It will be silly to argue that all of the remaining 800 million adults are also high-income earners who are simply dodging income taxes and thus, left out of this dataset which skews the Gini calculations.

To be sure, this is not about politics or economic policies of one government versus the other. India has been experiencing rising income inequality for more than a decade.

High and rising income inequality is a terribly worrying phenomenon that transcends politics. It is perhaps the nature of contemporary economic development models and excessive financialisation that exacerbate inter-personal income inequality. It is critical for policymakers to acknowledge and accept this phenomenon than defiantly bury their heads in the sand.

(Chakravarty is chairperson of Data Analytics department of the Congress party. Views expressed are personal)