After opening the day in the green, stock markets in India have continued their momentum and are presently trading on a positive note. Sectoral indices are trading on a positive note with stocks in the metal sector and capital goods sector witnessing maximum buying interest.

The BSE Sensex is trading up 285 points (up 0.9%) and the NSE Nifty is trading up 96 points (up 0.9%). The BSE Mid Cap index is trading up by 0.9%, while the BSE Small Cap index is trading up by 1.2%. The rupee is trading at 64.26 to the US dollar.

The World Inequality Lab in its World Inequality Report 2018 released yesterday stated that deregulation and opening-up of reforms in India since 1980s have led to substantial increase in inequality so much that top 0.1% of earners has continued to capture more growth than all those in the bottom 50% combined.

As per the report, in 2014, the share of national income captured by India’s top 1% of earners was 22%, while share of top 10% of earners was around 56%.

This trend has remained the same with top 0.1% of earners continuing to capture more growth than all those in the bottom 50% combined.

The bottom 50% presently has about 15% share in the total income.

Note that there also is a significant wealth disparity in India. As the chart below highlights, the richest 10% households in India, both rural as well as urban, have significantly higher wealth than the remaining 90% combined. While the data is dated and is of the year 2012, things wouldn’t be much different today.

Just to put the above figures in perspective, while the average urban household in the richest 10% group has wealth a whopping 50,000 times greater than the poorest 10%, the same ratio for the rural households stands at a lot less but still significant 227 times.

The Big Rich Poor Divide in India

How do we bring this gaping ratio down? Extract a higher income tax from the rich? Could be. However, our colleague Vivek Kaul doesn’t quite agree. Here’s what he wrote in one of the editions of Vivek Kaul’s Diary: