The Aryavarth Express
Agency (New Delhi): India should impose a 2 percent tax on net wealth exceeding Rs 10 crore and a 33 percent inheritance tax to address the problem of rising inequality and create fiscal space for social sector investments, suggests a new research paper co-authored by economist Thomas Piketty. The paper, titled ‘Proposals For a Wealth Tax Package to Tackle Extreme Inequalities in India,’ proposes a comprehensive tax package targeting the ultra-wealthy to address the concentration of wealth at the top and fund crucial social sector investments.
The paper claims such a tax would “raise phenomenally large tax revenues while leaving 99.96 percent of the adults unaffected.” It suggests that a 2 percent annual tax on net wealth exceeding Rs 10 crore and a 33 percent inheritance tax on estates over the same amount could generate 2.73 percent of the Gross Domestic Product (GDP) in revenues.
The paper emphasizes that the taxation proposal should be accompanied by explicit redistributive policies to support the poor, lower castes, and middle classes. It states that the baseline scenario would allow nearly doubling the current public spending on education, which has stagnated at 2.9 percent of GDP over the past 15 years, far below the 6 percent target set by the government’s National Education Policy 2020 (NEP 2020).
The authors note that the taxation proposal needs extensive debate and consensus on its design should emerge from a broader democratic discussion on tax justice and wealth redistribution in India. The paper is co-authored by Thomas Piketty (Paris School of Economics and World Inequality Lab), Lucas Chancel (Harvard Kennedy School and World Inequality Lab), Anmol Somanchi (Paris School of Economics and World Inequality Lab), and Nitin Kumar Bharti (New York University and World Inequality Lab).
The study follows the release of another study, ‘Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj,’ which revealed that economic disparities in India have reached historical highs. The authors argue that these extreme inequalities and their close link with social injustice can no longer be ignored.
Co-author Anmol Somanchi highlighted that Indian billionaires are largely an upper caste club and suggested that a progressive wealth tax package would likely benefit lower castes and the middle classes, affecting only a small number of ultra-wealthy upper caste families. “Such taxes could also play a small role in weakening the rigid link between social and economic inequalities in India,” Somanchi said.
He emphasized that the 2024 Lok Sabha election marks a critical juncture with heightened political and public focus on economic justice. Despite efforts from certain sections to derail this conversation, a vibrant public debate has emerged. Somanchi expressed hope that this momentum would translate into policy, noting, “Progressive wealth taxation, effective redistribution, and broad-based social sector investments are urgently needed to build an equitable and prosperous India.”
The authors in their working paper released on March 20 stated that inequality in India has skyrocketed since the early 2000s, with the income and wealth share of the top 1 percent population rising to 22.6 percent and 40.1 percent, respectively, in 2022-23. The rise of top-end inequality has been particularly pronounced since 2014-15, with India’s top 1 percent income and wealth shares among the highest in the world, higher than even South Africa, Brazil, and the US.