A new report about the surge in wealth of India’s billionaires has fuelled debates about worsening inequality and crony capitalism in the country against the backdrop of slower economic growth.
According to the report by Swiss banking giant UBS released earlier this month, the wealth of India’s billionaires rose by 42 per cent in 2024 to US$905 billion. The number of billionaires in the country rose by 56 per cent to 185 this year, the report shows.
The report comes as several Indian tycoons are facing greater scrutiny by authorities. Among them is billionaire Gautam Adani, who is facing bribery charges in the US. The case has prompted an outcry from Indian opposition politicians over the close ties between the Adani Group and the government of Indian Prime Minister Narendra Modi.
Analysts also note that the wealth surge of Indian billionaires has outpaced India’s economic growth, which slowed to a two-year low of 5.4 per cent in the April-June quarter.
Lawrence Loh, a professor at the National University of Singapore Business School, attributed the wealth increase partly to the rally in stock markets. The report has turned public attention in India to rising income inequality and could pile pressure on New Delhi to address the issue, Loh said. “Even though overall [economic] growth can slow down, some can still get very rich. If you look at the situation in India in terms of income inequality, the poor are getting poorer and the rich are getting richer,” he added.
A report by World Inequality Lab released in March found that India’s income inequality was among the highest in the world. By some measures, income distribution in India was more equitable under British colonial rule than the period when the country was independent, the report said. India has 1.2 billion lower-income individuals, 66 million middle-income individuals, 16 million upper-middle-income individuals, and almost 2 million in the high-income group, according to a 2021 report by the Pew Research Center
Jamus Lim, an associate professor of economics at ESSEC Business School Asia-Pacific, said India has to ensure that inequality would not become “too excessive” at the expense of slower economic growth. “India will continue to see more billionaires emerge in the years ahead. As long as this is accompanied by a steady uplift of the lower and middle classes, most would regard this as an acceptable trade-off,” he said.
Citing findings by Nobel Prize-winning economist Simon Kuznets, Lim said it was not unusual for a fast-growing developing country like India to experience an increase followed by a decrease in income inequality in tandem with stronger economic growth
The topic of crony capitalism has been latched on by Indian opposition politicians, particularly in the wake of Adani’s bribery charges. Opposition leader Rahul Gandhi, who has long railed against Modi and the ruling Bharatiya Janata Party for their alleged links to Indian tycoons, led protests last week along with other opposition politicians wearing jackets and T-shirts bearing the slogan, “Modi and Adani are one”.
In the 2019 parliamentary elections, the Congress Party launched a campaign against crony capitalism in a bid to sway voters, but it failed to gain support due to widespread acceptance of politicians needing funding from businesses to fund their campaigns.
Loh said: “I think there will be political pressure on the ruling party. [For] Modi’s government, [it] has been very, very high because of the purported linkages between the Modi government and the Adani group of business.”
According to ESSEC’s Lim, one of the biggest economic priorities in India is to ensure that the power of its largest conglomerates does not “go unchecked”, coupled with the need to boost the robustness of its business climate and the rule of law.
The surge in the wealth of Indian billionaires has also raised concerns that the country’s unemployment remains high and could derail efforts to reduce income inequality, according to analysts.
Delhi would likely face further pressure to tackle unemployment, particularly among younger Indians, according to Loh.
Modi’s administration has been pivoting the economy from services to manufacturing in a bid to draw more investments from local and international companies and help Indian youth find jobs.
In comparison with the growing affluence of Indian billionaires, their Chinese counterparts have seen their wealth decline by 20 per cent, according to the UBS report. Loh noted that Chinese tycoons have faced pressure from the government “not to be so visibly rich”. Indian billionaires might also be reined by Delhi to curb their display of wealth in future, he added.
Article was first published on SCMP.