The Swiss-based financial services company Credit Suisse recently published its Global Wealth Report 2020. This report offers the latest, broad-ranging data on wealth distribution worldwide.
Global Evaluation
In 2019, the world experienced an increase in total global wealth by USD 36.3 trillion, and the wealth per adult hit a new high at USD 77,309, marking an 8.5% increase from 2018. This upward trend implies a better global capacity to counter any economic impact resulting from the Covid-19 crisis throughout 2020.
Unfortunately, the beginning of 2020 saw a sharp decline in total household wealth, with a reduction of USD 17.5 trillion between January and March. This represents a 4.4% decrease when compared to the wealth recorded at the end of 2019. On the brighter side, the Asia Pacific region emerged as the highest contributor to household wealth globally during this period.
However, the pandemic significantly affected female workers, due to their substantial presence in sectors such as hotels, restaurants, personal service and retail that were severely disrupted by Covid-19.
India’s Household Wealth Landscape
Indian households predominantly hold property and other real assets, but financial assets, including stocks, bonds, and bank deposits, have grown over time and now comprise 22% of gross wealth. Despite the challenges presented by the Covid-19 pandemic and associated lockdowns, there was a slight increase in the average wealth of Indian adults to USD 17,420 in mid-2020 from USD 17,300 in December 2019.
However, India still suffers from significant wealth inequality, evidenced by the fact that 73% of adults possessed wealth below USD 10,000 at the end of 2019. Conversely, 2.3% of adults had a net worth exceeding USD 100,000. As of the end of 2019, India ranked fourth in terms of ultra-high-net-worth individuals, trailing the USA, China, and Germany. India had 4,593 such individuals, despite tripling unemployment rates to 24% between January and April 2020.
Challenges Related to Wealth Inequality in India
Identifying the Poor: Despite numerous welfare schemes, one of the significant challenges in developing countries like India is distinguishing between the poor and non-poor, particularly given unreliable data.
Inadequate Government Spending: Government expenditure on health, education, and social protection is low, often subsidizing the private sector instead of directly supporting citizens.
Impact on Women: Indian women bear the brunt of inequality, shouldering a large share of care work, which limits their participation in the labor force.
Impact on Vulnerable Groups: Marginalized groups such as Scheduled Castes and Scheduled Tribes are making strides in primary education but lag behind in advanced education. While many now have mobile devices, few own computers. Many remain at risk of falling into poverty due to a single illness.
Addressing Income Disparities: The Way Forward
Even though Covid-19 has significantly damaged the global economy, household wealth has shown resilience. Wealth serves as an insurance that households can tap into during hard times. Given the rising economic disparity, India has begun to focus on ‘inclusive growth’ recently.
The government can ease these inequalities by boosting social spending, altering gendered attitudes towards care work, and ensuring the wealthy pay their fair share. Rights-based entitlements, like those provided through the Mahatma Gandhi National Rural Employment Guarantee, along with technological innovations for opening bank accounts and facilitating digital payments to beneficiaries (JAM Trinity), have improved living standards to some extent.
Insurance schemes for universal health coverage (Ayushman Bharat), crop-failure and accidents (Pradhan Mantri Fasal Bima Yojana) also reflect efforts to address inequality. Such steps are vital to ensure help reaches those who need it the most.
