India’s income inequality problem: India’s richest are getting richer. That need not cause alarm. Booms create large fortunes, as they did for American technology entrepreneurs, China’s first manufacturers and South Korea’s industrial families. The concern begins when wages and jobs fail to provide the rest of the population with a route upwards.
Figures placed before Parliament sharpen that concern. The number of taxpayers who reported gross total income of at least ₹100 crore rose from 142 in assessment year 2021-22 to 576 in 2025-26. The latest number is four times the number five years ago. It may also reflect better reporting and tax compliance, but the rise is too large to dismiss.
READ | Urban incomes growth masks real inequality divide
India should produce more rich entrepreneurs as it grows. Listed companies have reported high profits, equity values have risen and startup founders have made fortunes. None of this establishes that the economy has become less fair.
The troubling evidence lies elsewhere. Wage growth has trailed corporate profits in several industries. Organised employment has not absorbed the millions entering the workforce. Household consumption remains uneven. Wealth created through shares, property and business ownership has pulled away from incomes dependent on salaries or casual work.
India income inequality and the consumption data
The government argues that inequality has declined. The Household Consumption Expenditure Survey for 2023-24 puts the rural Gini coefficient for consumption at 0.237, down from 0.266 a year earlier. The urban coefficient fell from 0.314 to 0.284. These are substantial declines in measured consumption inequality. The survey, however, measures what households spend, not the assets they own.
NITI Aayog estimates that multidimensional poverty fell from 24.85% in 2015-16 to 14.96% in 2019-21, lifting about 135 million people out of poverty. This is a material achievement. It does not settle the argument over inequality.
A family may have electricity, a bank account and a pucca house and remain one illness away from debt. It may be unable to pay for higher education or acquire an asset that produces income. Escape from multidimensional poverty does not necessarily bring economic security.
Nor does the Gini coefficient capture the gap between a household that consumes more and one whose assets appreciate without additional labour. Shares, property and business profits compound. Wages do not.
READ | Higher education inequality: Why access is not the same as opportunity
Wealth inequality escapes India’s tax data
The Wealth-tax Act, 1957 ceased to apply from April 1, 2016. The Union government consequently does not maintain comprehensive taxpayer data on aggregate wealth. Income-tax returns provide an incomplete account of concentration at the top.
The distinction is important. An entrepreneur reporting ₹100 crore of annual income may also gain several times that amount from an increase in the value of a company holding. A salaried household depends on increments and savings from taxed income. Stable income inequality can coexist with a rapid increase in wealth inequality.
The more useful question is whether people born outside the prosperous classes have a reasonable chance of joining them. That chance depends on the quality of schools, healthcare, skills and jobs available to families that cannot buy these services privately.
The Nordic countries tax high incomes and use the proceeds to fund broadly accessible education, healthcare and social protection. Their experience does not offer India a template that can simply be imported. It does show why redistribution after incomes are earned cannot compensate for poor public services that determine earning capacity.
South Korea combined industrialisation with mass schooling, vocational training and manufacturing employment. Singapore used public housing, compulsory savings and education to spread some of the gains from rising productivity. In both cases, employment and public investment did more of the work than hostility to private wealth.
India fares badly on this measure. Education and healthcare of acceptable quality increasingly have to be purchased. The neighbourhood, school and hospital available to a child often reveal the family’s income before the child has entered the labour market.
READ | Wealth inequality blind spot: The missing data on the rich
Jobs remain India’s strongest answer to inequality
India has raised taxes on high earners through slabs and surcharges. It also subsidises food, housing, healthcare and education. Section 146 of the Income-tax Act, 2025 continues the earlier Section 80JJAA incentive, allowing eligible businesses to deduct 30% of the additional employee cost for three consecutive tax years. The provision rewards formal hiring, subject to wage, tenure and provident-fund conditions. Income-tax Act, 2025
Tax concessions cannot compensate for an economy that generates too few productive jobs. China reduced poverty and widened opportunity by moving workers from agriculture into factories and modern services. India’s employment structure remains dominated by informal work and small enterprises with little capital, low productivity and limited wage growth.
The rise from 142 to 576 people reporting incomes above ₹100 crore is evidence of wealth creation. Whether it also becomes evidence of a successful economy will depend on how many Indians can improve their position through work rather than inheritance or ownership of appreciating assets.