Thomas Piketty’s recent book on Capital in the 21st Century is creating waves in Europe and the United States. He shows the central role of the accumulation of wealth in the long term dynamics of inequality, in particular arguing that when the return to capital exceeds the rate of economic growth, there is a tendency for the distribution of wealth to become steadily more unequal. He shows that the share of the very rich (top one per cent or top 0.1 per cent) in national income has changed quite substantially over time. His data mostly refer to industrialized countries, but he has a series for India (based on income tax records) showing that the share in income of the top 1 per cent declined substantially from Independence until 1980, but has been rising since then.
Research into inequality in India suggests that the overall distribution of expenditure has become more unequal, but the changes are not large. Would a focus on wealth and the incomes of the very wealthy give a different picture? Perhaps it would. There is certainly anecdotal evidence that the benefits of rapid growth are disproportionately captured by a small group, and the gap between lifestyles at the top and the bulk of the population is widening.