Key Findings

• Income Inequality: In 2022-23, the top 1% of the population in India captured 22.6% of the national income, the highest level since 1922. This level of inequality is among the highest in the world, surpassed only by countries like South Africa.
• In other words, states the paper, “the ‘Billionaire Raj’ headed by India’s modern bourgeoisie is now more unequal than the British Raj headed by the colonialist forces”. It also notes: “It is unclear how long such inequality levels can sustain without major social and political upheaval.”
• Wealth Inequality: The top 1% also held 40.1% of the national wealth in 2022-23, marking the highest concentration since 1961. The report highlights that this extreme concentration of wealth at the top has tripled since 1961.
• Historical Trends: The paper documents a significant rise in the number of very high-net-worth individuals since the economic liberalization of the 1990s. From just one billionaire in 1991, India had 162 billionaires by 2022.
• Gender and Social Disparities: The report also touches on the disparities in wealth distribution among different social groups and genders, noting that marginalized communities and women are disproportionately affected by economic inequality.
• Growth in average incomes: According to the WIL paper, between 1960 and 2022, India’s average income grew at 2.6% per year in real terms (that is, after removing the effect of inflation). This period can be broadly divided into two halves: “Compared to a real growth rate of 1.6% per year between 1960 and 1990, average incomes grew by 3.6% per year between 1990 and 2022”. It further states that the periods 2005-2010 and 2010-2015 saw the fastest growth at 4.3% and 4.9% per year respectively.
• Rise in the percentage of income taxpayers: The paper finds that the share of the adult population that filed an income tax return — which had remained under 1% till the 1990s — also grew significantly with the economic reforms of 1991. By 2011, the share had crossed 5% and the last decade too saw sustained growth with around 9% of adults filing a return in the years 2017-2020.

Challenges:

• High Agricultural Employment: The shift towards agriculture during the pandemic highlights a regression in employment quality, with a significant number of workers still in low-productivity agricultural jobs.
• Skill and Job Mismatch: There is a surplus of unskilled and semi-skilled workers despite higher educational attainments, leading to high unemployment rates among educated youth.
• Youth Unemployment: A significant challenge remains with high unemployment rates among educated youth and a considerable portion of the youth not engaged in employment, education, or training.

Recommendations/Way Forward:

1. Job Creation: Boosting production in labour-intensive sectors like manufacturing, services, and agriculture to create more jobs.
2. Improving Job Quality: Enhancing the quality of employment, focusing on reducing the prevalence of low-paid, insecure jobs.
3. Addressing Labor Market Inequalities: Increasing women's employment and developing effective strategies for NEET youth.
4. Training and Skills Development: Improving training systems and labour market policies to better match job supply with demand, involving significant private sector participation.
5. Accurate Labor Market Statistics: Developing robust statistics to monitor labour market changes due to technological advancements.