The story, presumably taken from news agencies such as Press Trust of India and Indo-Asian News Service – cited a recent report by wealth research firm New World Wealth that analysed income inequality in the world’s major economies by looking at the wealth controlled by their millionaires. Stories on Indian newspapers and websites further said that 54% of India’s wealth is controlled by its millionaires.
While unequal distribution of wealth is admittedly a big concern in India, the situation may not be as dire as reported.
Far from coming second in the New World Wealth report, India is actually 12th on the list of most unequal countries of the world. Millionaires hold 45% of its wealth – which although significant, is 9% less than the widely reported figure, according to Andrew Amoils, head of research at New World Wealth.
Media outlets had misread the numbers put out by his organisation or had assumed that India came second after Russia, Amoils told Scroll.in.“I don’t know how this happened,” he said. “Maybe they misread the data or assumed India’s position. Indian millionaires control around 45% of total wealth in India. The figure of 54% that is floating around at the moment is not correct.”
Later Amolis emailed Scroll.in saying New World Wealth had itself unintentionally given out the 54% figure to the media, by including the number of Non-Resident Indians who are millionaires.
"The figure of 54% includes non resident Indian (NRI) millionaires. There are approximately 85,000 NRI millionaires according to the India 2016 Wealth Report. Notable NRIs include the Mittal family among others," Amoils said in the email. "If one just includes millionaires living in India, then figure is 45%."
Area of concern
However, the fact that it comes 12th by no means indicates that India’s inequality problem is small or does not need immediate attention.
New World Wealth said that the ideal percentage of wealth in the hands of millionaires should be less than 30%, so that it can have a powerful and significant middle class.
“If millionaires control over 40% of a country’s wealth then there is very little space for a meaningful middle class,” the report said. “Ideally the ratio should be less than 30%.”
At the other end of the spectrum was Japan, ranked the most equal country in the world, with 22% of its wealth controlled by millionaires. Coming close were New Zealand (26%), Norway (27%) and Australia (28%).
No small matter
Income inequality has been a persistent problem in India, as demonstrated by a World Economic Forum report last year. The report said that India has a high Gini coefficient of 51.4%. The coefficient measures inequality on a scale of 0-100 – 100 signifies maximum inequality, where all the wealth is concentrated in the hands of a few, and 0 implies that it is shared equally.
India, according to the WEF study, fared worse than other countries in the same income bracket, such as Egypt, Indonesia, Nigeria and Pakistan. India was ranked 32nd out of 34 countries in the same income group.
Studies undertaken in India have also repeatedly shown that the fact that most of the country's wealth is concentrated in the hands of a few is not known. A report published by financial agency Credit Suisse two years ago showed that almost half of India’s total wealth was in the hands of the richest 1% citizens, while the top 10% controlled about 74% of it. The poorest 30%, meanwhile, had just 1.4% of the total wealth.
The Credit Suisse report further showed that India’s richest have rapidly been becoming richer since the 2000s – despite the financial crisis in the United States that triggered a global slowdoan in 2008-’09.
Indians make up a chunk of the world’s poorest population, while China accounts for a bulk of the middle class, and the United States has a majority of the richest people in the world.
“Residents of India are heavily concentrated in the lower wealth strata, accounting for over a quarter of people in the bottom half of the distribution,” the Credit Suisse report said. “However, its extreme wealth inequality and immense population mean that India also has a significant number of members in the top wealth echelons.”
The story has been updated with a clarification from New World Wealth.