Rich Are Getting Richer At the Rates Observed Before Independence

What is the only point of economic data in India that is returning to pre-Independence levels? The relationship between wealth and income. What this proportion indicates is whether, over time, those who own assets and / or have substantial savings are getting richer at a faster or slower pace than the rest of the population. The greater the relationship, the greater the gap. And, interestingly, in the almost three decades since the liberalization of India, incomes have grown substantially, but the rich have become richer at a faster rate as well. In fact, the national wealth-income ratio is returning to levels prior to Independence of 600-700%. The time series data are from a working paper of Rishabh Kumar of the State University of California. Sourabh Gupta breaks the numbers.
Fall & Rise
* In the last 20 years, there has been a sharp increase in the value of national wealth in relation to national income.
* For 2012, wealth was worth 550-600% (or six years) of income, compared to 350-400% at the end of the 19th century.
* Not only India, wealth seems to accumulate faster than economic growth everywhere, China, the United States, Europe, Japan and Russia, regardless of their stages of development.
THE ACCUMULATION OF WEALTH HAS THREE DRIVERS ...
* Savings, asset prices and initial wealth. Part of this increase in the proportion seems to be driven by inflation of asset prices, especially the jump in land prices.
* This means that those who already have wealth are getting richer at a faster rate than the rest.
* In the late colonial period, wealth became as large as 6-7 years of national income (proportion of 600-700%). Between 1950 and 1980, wealth fell to 3 to 4 years of income. He is returning to almost 6 years of admission.
NATIONAL WEALTH: public + private wealth (land, machinery, buildings and homes, foreign net assets, gold and silver)
NATIONAL INCOME: Net national product + net income from external factors
NATIONAL SAVINGS: Net capital formation + net foreign investment + capital transfers from abroad
Unless there is a brief exit in the "planned" phase of 1950-80, the national wealth / income ratio closely followed the private wealth / national income relationship.
In 1950-2012, the increase in the national savings rate was driven by the private savings rate. The public savings rate became almost persistently negative since the 1990s due to the increase in public debt since 1985.
As expected, the private sector represented the increasing participation of non-financial assets nationwide since 1990.

By: Preeti Narula
Content: https://economictimes.indiatimes.com/news/economy/indicators/rich-are-getting-richer-at-rates-seen-in-pre-independence-india/articleshow/70287395.cms