April 2025

By

Ram Singh, Delhi school of Economic (Director) and Permanent member of Monetary Policy Committee of the RBI.

Considers

Incomes of over 7,600 families and their family members across India, with the raw data taken from the national account of listed companies of the wealthiest Indian families, income tax statistics from the Central Board of Direct Taxes, the Lok Sabha election affidavits (2014 and 2019), and the Forbes list (FL) of billionaires, among others.

Key Findings

Wealthy family

Common person vs. Wealthy person

The wealthier the Indian families are, the lesser the income they report relative to their wealth.
On average, the total income reported by the bottom 10% of individuals is more than the 120% of their wealth. For the wealthiest 5% individuals, it is just about 3.7% of their wealth.

Wealthy family vs Common family

The wealthiest 0.1% of families report a total income of roughly 2% of their wealth.
The wealthiest Indian families on the Forbes list report a taxable income of less than 0.6% of their wealth.
The bottom 10% of families report 188% of their wealth as total income.

Under reporting wealth

Under reporting of income increases with wealth and even after adding all types of income, the reported income of the wealthiest 0.1% families is still less than than 20% of their capital income or annual return from wealth.

Wealth goes unreported

80% of their of capital income of the top 0.1% goes unreported.
90% of the capital income of the Forbes-list, ultra-wealthy families goes unreported.

Exploiting gaps in tax rules

The wealthy avoid taxes by “exploiting gaps in tax rules”. They also under-reporting their rental income and disguising their taxable income as tax-free agricultural income.

Minimising income wealth ratio

They minimise their income-wealth ratio by suppressing dividend payouts and take-outs of wages, honoraria and commissions.

Government

Indian tax regime - Progressive vs. Regressive

The Indian tax regime is said to be “progressive” since the applicable marginal tax rates increase with reported income. However, with the affluent choosing how much of their income gets taxed, the paper posits the Indian tax regime as regressive vis-à-vis wealth.

Reporting of income and wealth improved post 2014

The reporting of income and wealth has improved in recent years. Compared to 2014, people reported significantly more income and wealth in 2019, even after considering inflation, rising national income, and other relevant factors.

Efforts by Central government post 2014

2016 demonetisation, an increase in income tax seizures, and searches by the Enforcement Directorate to improve the reporting of incomes, among other initiatives, have improved the situation.

Women reporting lower income than men

Women report a lower income than men, with the paper attributing this trend to labour market outcomes where wages for women are lower than for men and that women, unlike men, hold non-income-yielding assets, such as gold and jewellery.

Politicians

Politician are wealthier than others

Although politicians are usually wealthier than the average person across countries, the gap is starker for India.

Average family wealth of Lok Sabha MP

The average family wealth of Lok Sabha MPs in 2019 was USD 9,98,311, and the National Sample Survey Office (NSSO) 77th round showed the average wealth of an Indian household as USD 26,867.

Gap between average family wealth of politician and population

So, in India, the gap between the average family wealth of politicians and the average wealth of the population is 1 to 37. This ratio is 1 to 4 in the US.

Poor Indian politicians

Comparing the wealth of the top 10 most affluent elected politicians across the globe, the wealthiest members of China’s National People’s Congress had a combined wealth of USD 132.3 billion in 2018, and those of the US House of Representatives had USD 1.2 billion that year. However, the wealthiest Indian MPs of 2019 had just USD 0.3 billion.

Indian politicians are honest

Indian politicians are more honest in reporting their income than in the US and China.

Subject to public scrutiny

Income and wealth disclosures by Indian politicians are public and subject to scrutiny by the media, civil society, opponents, and the Election Commission of India.