Why in News?

• The World Inequality Report 2026 (3rd edition after 2018 and 2022), released by the World Inequality Lab and led by economists such as Thomas Piketty, highlights the deepening income, wealth, and gender inequalities across India and the globe.
• The findings are crucial for achieving inclusive growth, social justice, welfare economics, SDGs, and climate equity across India and the globe.

What’s in Today’s Article?

• India’s Income and Wealth Inequality
• Global Inequality Trends
• Geographic Inequality Shift (1980–2025)
• Gender Inequality
• Climate Inequality
• Reasons Behind Inequality
• Challenges Identified, Policy Recommendations and Way Forward
• Conclusion

India’s Income and Wealth Inequality:

• Average income and wealth: Average annual income per capita is around 6,200 euros (PPP), and average wealth stands at about 28,000 euros (PPP).
• Income inequality:
  • Top 10% earners capture 58% of national income. The bottom 50% receive only 15% of income.
  • This is a jump from 57% (top 10%) and 13% (bottom 50%) in the 2022 Report.
• Wealth inequality:
  • The richest 10% hold 65% of total wealth. The top 1% own 40% of India’s wealth.

Global Inequality Trends:

• The top 0.001% (~60,000 ultra-rich) own wealth three times the bottom 50% of humanity. Their share rose from 4% (1995) to 6% (2025).
• The global top 10% own 75% of world wealth; bottom 50% own just 2%.
• The top 1% control 37% of global wealth—more than eighteen times the wealth of the entire bottom half of the world population. 

Geographic Inequality Shift (1980–2025):

• China: By 2025, China’s position has shifted upward with much of its population having moved into the middle 40%, and a growing share having entered the upper-middle segments of the global distribution.
• India (lost relative ground): In 1980, a larger part of its population was in the middle 40%, but today almost all are in the bottom 50%.
• Sub-Saharan Africa: Remains concentrated in the lower half of the global distribution.

Gender Inequality:

• Indian perspective: Female labour force participation remains extremely low at 15.7%, and there are persistent income gaps across sectors.
• Global perspective:
  • Excluding unpaid work, women earn only 61% of what men earn per working hour; and when unpaid labor is included, this figure falls to just 32%.
  • Women capture just 25% of global labour income, a share that has barely shifted since 1990.
  • Regional shares of women’s labour income:
    • Middle East & North Africa (MENA): 16%
    • South & Southeast Asia: 20%
    • Sub-Saharan Africa: 28%
    • East Asia: 34%
    • Europe/North America: ~40%

Climate Inequality:

• The poorest 50% contribute only 3% of carbon emissions linked to private capital ownership. While the top 10% account for 77% of emissions.
• The wealthiest 1% account for 41% of private capital ownership emissions, almost double the amount of the entire bottom 90%.

Reasons Behind Inequality:

• The inequality in India (and globe) remains deeply entrenched across income, wealth, and gender dimensions, highlighting persistent structural divides within the economy.
• These structural divides are -
  • Low female workforce participation.
  • Weak multilateralism on global redistribution.
  • Rise of ultra-wealth concentration.
  • Weak taxation systems and loopholes for the ultra-rich.

Challenges Identified, Policy Recommendations and Way Forward:

• Regressive taxation:
  • Effective tax rates decline sharply for billionaires and centi-millionaires. As a result, States lose revenue, impacting education, healthcare, and climate action.
  • Strengthen progressive taxation - Implement wealth taxes on ultra-rich. Eliminate tax loopholes and ensure effective tax compliance.
• Gendered labour burden:
  • As unpaid work is undervalued, it depresses women’s economic mobility.
  • Addressing gender inequality - Recognize and reduce unpaid care work through public provisioning. Increase female labour participation through skilling, flexibility, childcare.
• Inter-country inequality:
  • India’s global position worsened compared to China. Limited transition of population into the global middle class.
  • Redistributive social protection - Expand cash transfers, pensions, unemployment benefits. Targeted support to vulnerable households.
• Climate responsibility gap:
  • High emitters evade accountability; vulnerable populations bear disproportionate impact.
  • Climate justice framework - Equitable sharing of emissions responsibility. Incentivize green technologies and sustainable consumption.
  • Strengthen global multilateralism - Coordinated global approach to taxation, climate, and redistribution.
• Inequality within the top:
  • Even within rich groups, inequality widens due to extreme concentration of power.
  • Public investment in human capital - Free, high-quality schooling; universal healthcare, nutrition, childcare; and closing early-life disparity.

Conclusion:

• The World Inequality Report 2026 underscores that India and the world are witnessing historic levels of inequality.
• India’s relative decline in the global distribution and persistently low female participation indicate deep structural issues.
• As Thomas Piketty notes, promoting equality is essential to tackle the social and climate challenges of the coming decades.
• For India, achieving inclusive growth, social justice, and SDG targets will require strong political will, effective governance, and sustained investment in human capital.