Ex-Babu Stirs Slugfest after sub-Saharan Income Inequality Claim

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Income Inequality Gains Spotlight After Q2 GDP Slumps to 7-month Low

By S Jha

New Delhi, December 3: The second quarter Gross Domestic Product (GDP) growth rate came crashing to 5.4 per cent. The growth rate is seven months low.

Former secretary in the Government of India Anil Swarup set off a massive debate on his timeline by arguing deepening income inequality in the country. The former IAS official claimed that if the top rich is excluded, the per capital income of India would be lower than sub-Saharan countries.

The decline in the GDP growth rate has been blamed to sluggish growth in manufacturing and a deceleration in mining and quarrying.

“India’s GDP in 2024 is approximately $4 trillion (₹330 lakh-crore), with a population of 1.4 billion, resulting in a per capita income of about $2,800,” Swarup wrote on Linkedin. He added that “this figure is misleading when we consider wealth distribution. Ambani and Adani alone have a combined wealth of around $200 billion.”

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“The top 10 wealthiest individuals account for about $420 billion, the top 200 individuals for about $1 trillion, the top 1% of the population for $1.6 trillion, and the top 5% for $2.5 trillion,” further stated Swarup, whose last stint in the government was as secretary higher education.

Swarup further stated that “excluding Ambani and Adani, India’s per capita wealth drops to $2,700. Excluding the top 10 individuals, it falls to $2,500; excluding the top 200, it drops to $2,150; excluding the top 1%, it plummets to $1,730; and excluding the top 5%, it sinks to about $1,130. This last figure is below the per capita income of most Sub-Saharan African countries.”

His comments invited sharp debate with professionals working for the government and the private sector arguing on merits of Swarup’s claims. “GDP per capita is not equal to per capita wealth. The GDP of the nation is basically just a measure of the economic activity in the region,” said Anupam P, a private sector professional.

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He stated that a “$4 trillion economy implies that the volume of financial transactions amounted to $4 trillion in the given year, it does not directly reflect the net worth/wealth of the citizens.” “The premise is flawed. The annual revenues of corporations registered in India most certainly contribute to India’s GDP, as this is a marker of economic activity. The personal net worth/wealth of the founders/proprietors, on the other hand, most certainly does not count towards India’s GDP,” added Anupam as he rebutted premises of Swarup.

Yet, Swarup also found support from a number of people who empathised with his concerns on the income inequality in the country. “Appreciate the spirit behind the effort to highlight inequality and the problem of judging the quality of life based on averages. However, there is a fundamental error. You have mixed up GDP (which is a flow and represents economic activity in a year) and Wealth (which is like a balance sheet item),” stated Hari TN, a private sector professional, as he also joined the debate.

He stated that Swarup merely took a “GDP of $4 trillion and subtracted wealth numbers of various groups of people. Totally wrong. To do this correctly take National Income and subtract the incomes of different wealthy groups (and not their wealth) and do the calculation like you have done. The conclusion may not change though. Everyone knows India is a very unequal nation.”

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