The top one percent of wealthy people in India owned more than 40% of the total wealth created in the country from 2012 to 2021, while only 3% of the wealth has gone to the bottom 50%, according to Oxfam India’s latest report ‘Survival of the Richest: The India Story’. Just five percent of Indians own more than 60 percent of the country’s wealth, the report says. It calls for progressive tax measures such as wealth tax and inheritance tax, to deal with widening inequality and fund health and education sector spending. Based on Credit Suisse data, Forbes data on billionaires, National Sample Survey Organisation (NSSO) data and other sources, the report provides striking figures highlighting the level of wealth and income inequality in India and the way tax exemptions for the rich and indirect taxes like the Goods and Services Tax (GST) widen the gap.
The report highlights how the Union Government continues to tax the poor and middle class more than the rich. Approximately 64% of the total Rs 14.83 lakh crore in GST came from the bottom 50% of the population in 2021-22, while 33% of GST comes from the middle 40% and only 3% of GST from the top 10%, the report says. The bottom 50% of the population pays six times more on indirect taxes as a percentage of income compared to the top 10%, it says.
The Oxfam India report which was released on the opening day of the World Economic Forum in Davos, Switzerland on Monday, January 16, reveals that the total number of billionaires in India increased from 102 in 2020 to 166 billionaires in 2022. It says that the combined wealth of India’s 100 richest has touched $660 billion (Rs 54.12 lakh crore) – an amount that could fund the entire Union Budget for more than 18 months. The Adani group chairman Gautam Adani’s wealth alone increased eight times during the pandemic, and then nearly doubled to Rs 10.96 lakh crore according to Forbes in October 2022, making him the richest Indian.
“Roughly 19% of the Indian billionaires come from the private healthcare and pharmaceutical industry, which was greatly boosted following the onset of the COVID-19 pandemic. In 2020 itself, there were seven new billionaires in the healthcare and pharma industry, with their combined wealth reaching INR 4.3 lakh crore by early 2021,” the report highlights.
Making note of the huge amounts of loans written off by public banks mostly to corporates (Rs 11.17 lakh crore in the last six years till financial year 2021-22), reduction in corporate tax slabs by the Union government in 2019 and other forms of tax exemptions, the report shows that on the other hand, the indirect nature of the GST and fuel taxes burdens the most marginalized. “The subsequent increase in the prices of goods and services coerces them to spend a larger portion of their income on essential commodities,” it says.
Noting the projected revenue foregone of the government in the form of incentives and tax exemptions to corporates, it says, “In 2019, the Central Government reduced the corporate tax slabs from 30% to 22%, with newly incorporated companies paying a lower 15% rate. The projected revenue foregone by the Union Government in 2020-21 in the form of incentives and tax exemptions to corporates was more than Rs 1,03,285.54 crore. This is the equivalent to the allocation towards Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for 1.4 years.”
The report gives many more such examples, on how progressive tax measures could help fund the health and education sector. For instance, the report says:
> A one-off tax on unrealized gains from 2017–2021 on just one billionaire, Gautam Adani, could have raised Rs. 1.79 lakh crore, enough to employ more than five million Indian primary school teachers for a year
> Taxing the top 10 Indian billionaires at 5% on their current wealth can help cover the entire cost of tribal healthcare for 5 years
> If India’s billionaires are taxed once at 2% on their entire wealth, it would support the requirement of Rs 40,423 crores for the nutrition of malnourished in the country for the next 3 years
Based on the report, Oxfam India has recommended that the Union Finance Minister “introduce one-off solidarity wealth taxes and windfall taxes to end crisis profiteering.” The report recommends permanently increasing taxes on the richest one percent. “The Finance Minister must especially raise taxes on capital gains, which are subject to lower tax rates than other forms of income. And also implement inheritance, property, and land taxes, as well as net wealth taxes,” it says.
It also recommends enhancing the budgetary allocation of the health sector to 2.5% of GDP (gross domestic product) by 2025, and that of education to 6% of GDP, as committed in the National Health Policy and National Education Policy.
The report also notes the role of caste in the concentration of wealth inequality, and recommends spending more on programmes meant for improving educational status of students from marginalised sections.