Editorial: Survival of the richest

The creation of an International Panel on Inequality deserves urgent attention as global inequality reaches ‘emergency levels’, endangering democracy and social cohesion

Despite numerous welfare models being implemented across nations, the gap between the rich and the poor continues to widen. In India, the inequality is even more pronounced. India’s richest 1 per cent increased their wealth by 62 per cent between 2000 and 2023, according to a recent report commissioned by the G20 Group. This trend reflects global patterns of rising wealth concentration. The rich are steadily getting richer in the world’s fourth-largest economy, but the poor are getting poorer. The study found that the richest 1 per cent of people in the world captured 41 per cent of all new wealth created between 2000 and 2024, while the bottom half of the global population received only 1 per cent. Increasing wealth inequality is a worldwide crisis that endangers democracy and social cohesion. The study, led by Nobel Prize-winning economist Joseph Stiglitz, warns that global inequality has reached “emergency levels”, putting economic stability and climate progress at risk. Inequality erodes trust in institutions, fuels political polarisation, reduces participation among poorer citizens and residents, and creates social tensions of different kinds. The report was prepared by the G20 Extraordinary Committee of Independent Experts on Global Inequality, including economists Jayati Ghosh, Winnie Byanyima, and Imraan Valodia. Around 2.3 billion people now face food insecurity, up by 335 million since 2019, and half the world’s population still lacks access to basic health services, with 1.3 billion people pushed into poverty by medical expenses. One in four people worldwide now regularly skip meals, while wealth has reached the highest level in history.

The problem of inequality can be tackled through international cooperation. The expert panel’s recommendation for the creation of a new body, the International Panel on Inequality (IPI), deserves serious consideration. Working on the lines of the Intergovernmental Panel on Climate Change (IPCC), the proposed body would track inequality trends worldwide and give governments clear, reliable data to guide policies. This is very crucial because the report warns that the countries with high inequality are seven times more likely to face democratic decline than those with fairer wealth distribution. Over the past 40 years, the average income of individuals in the bottom 50 per cent of the world’s population has increased by USD 358, while the top 1 per cent recorded an increase of USD 1,91,000, at a constant 2024 dollar rate, the report said. The findings should prompt policymakers to find ways and means to bridge the ever-increasing gap. Earlier this year, the World Bank reported that India had managed to lift 17 crore people from extreme poverty between 2011-12 and 2022-23. The Centre patted itself on the back for a job well done, even as the methodology for reporting poverty estimates came under scrutiny. Efforts to reduce poverty should make a qualitative difference on the ground. While economists are generally not keen on the imposition of a wealth tax, the government must ensure that the super-rich contribute their fair share to the exchequer.

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