In a recent study on wealth distribution, Credit Suisse found that India has significantly high wealth disparity. The study shows that 1% of the population held over 50% of the country’s wealth. The wealth concentration is higher than the global average of 47.2%.
On a positive note, the concentration has decreased marginally in the last one year. This decline is in line with global trend. While the share of top 1% of the population in total wealth had increased for majority of the countries compared to 2007, in the last one year the increase seems to have halted.
Wealth distribution across various income segments
91% of the Indian population has income below USD 10,000 compared to the global average of around 64%. On the other hand in developed economies only 30% adults fall within this category. Moreover, in majority of the cases their membership within this category is temporary – due to business losses or unemployment, or a life-cycle phase such as youth or old age.
Compared to our neighbour China India is under-represented in in the mid-wealth segment, which includes individuals having net worth between USD 10,000 to USD 100,000. China, which experienced a surge in wealth in recent years, has 59% of its population in this segment. India meanwhile has just 8.6% of adults in the mid-wealth segment.
Only 0.6% of the Indian adults has net worth above USD 100,000. In comparison globally 9.5% of the population has wealth between USD 1,00,000 to USD 1 million.
The new century brought with it a sharp rise in average Indian individual’s wealth from USD 1,830 in 2000 to USD 7,020 in mid-2018. While there were a few bumps along the road such as the 2008 crisis and the currency depreciation, the overall trajectory has been upwards. Annual growth of wealth per adult averaged 8% over 2000–18. Prior to 2008, wealth also rose strongly, from USD 1,830 in 2000 to USD 5,020 in 2007. After falling 26% in 2008, it rebounded, and grew at an average rate of 7% up to 2018.
However, despite the growth with a mean income of USD 7,020 India lags behind developed economies like USA (USD 403,974) or our neighbour China (USD 47,810). The situation is even worse if we consider median wealth. India’s median wealth stood at USD 1,289 in 2018, compared to USD 61,667 in USA and USD 16,333 in China. While the median wealth in India is increasing, the low value denotes high concentration of wealth in hands of a few.
The country’s total wealth stood at USD 6 trillion in 2018 and it is expected to grow to USD 8 trillion in real terms by 2023 according to the report.
