According to a study by the SBI Economic Research Department, income inequality in India is narrowing, with more than one-third of taxpayers moving into the higher income tax bracket, and the amount paid by high-income taxpayers decreasing. The concept of a post-pandemic K-shaped recovery has been debunked.
Some sectors of the economy may see strong growth, while others will continue to experience a K-shaped recovery. Some economists, including former Reserve Bank of India Governor Raghuram Rajan, have described India's post-pandemic economic expansion as K-shaped.
According to the SBI research report, the K-shaped economic recovery is „at best flawed, biased and ill-conceived, with India's remarkable rise marking the renaissance of the new Global South a „It looks like they are fueling profits.“ Quite tasteless. ”
The report states that „income inequality, as measured by the Gini coefficient of taxable income (one of the most widely used measures of income inequality), significantly increased from 0.472 to 0.402 from fiscal 2014 to 2022. „It has decreased to 20%,“ he said.
While 36.3% of taxpayers moved from the lower income tax bucket to the higher income tax bucket, resulting in a 21.3% increase in income, the top 2.5% of taxpayers' income contributions increased from FY2014 to FY2014. It decreased from 2.81% to 2.28% during that period. Fiscal year 2021 (April 2013 to March 2014 to April 2020 to March 2021).
The report further said that MSME value chain integration has transformed 19.5 per cent of small enterprises into large enterprises and increased consumption of the bottom 90 per cent of the population by Rs 8.2 billion since the outbreak.
As rural economic income increases, people are switching from two-wheelers to four-wheelers.
It is estimated that up to 15 per cent of Indian taxpayers are women, adding that around 2 billion semi-urban families consume food through Zomato.
The report is the first in India's history to use publicly available income tax data to determine inequality.
Income tax returns (ITRs) filed by individual taxpayers with income between Rs 500,000 and Rs 10,00,000 increased by 295% between Assessment Year (AY) 2013-14 and AY 2021-22; This shows a favorable trend in the transition to higher income earners. Total income range.
The number of ITRs filed by individuals with income between Rs 1 million and Rs 25 million has increased by 291 per cent, and the total number of people filing income tax has increased from 7 billion in FY22 to 7.4 billion in FY2023. Till December 31st, his 8.2 billion ITR for FY24 has been submitted.
One of the most commonly used indicators of income inequality is the Gini coefficient. According to the Gini coefficient, evaluated using ITR data on national taxable income, inequality in personal income decreased from 2015 (FY 2014) to 2023 (FY 2022), decreasing from 0.472 to 0.402. Furthermore, SBI predicts that based on past trends, the Gini coefficient for FY23 will decline to 0.402.
According to income tax data, 36.3 per cent of individual ITR payers with income below Rs 350,000 left the lowest income bracket and moved to the top in FY 2015 (FY 2014). In the income bracket of 1 million to 20 million rupees, 15.3% moved from 3.5 million rupees to 5 million rupees, 4.2% moved from 5 million rupees to 10 million rupees, and the rest moved further up.
According to the report, 21.1% of the total income of the lowest income group below 400,000 rupees has shifted upward, 6.6% of the total income to the 400,000 to 500,000 rupee group and 7.1% to the 500,000 rupees group. It is said that there is a shift from Rs. It is 2.9% in the 1 million rupee group, 0.8% in the 20 million rupees to 50 million rupees group, and 0.8% in the 50 million rupees to 1 million rupees group.
The income gap for people with incomes below Rs 3.5 million decreased from 31.8 per cent to 15.8 per cent between FY 2014 and FY 2021. This means that the share of this income group in total income relative to the population has increased by 16 percent. said the report.
Regarding the share of top taxpayers in income, the report said that in FY 2014, the total income of 23 people with income above Rs 100 million was 1.64% of the total income in FY 2014. Even though the number of such individuals increased to 136 in FY21, their share in total income declined to 0.77% in FY21.
Following the pandemic, households have restructured their savings towards physical assets such as real estate, the report said.