Top Indian Incomes, 1922-2000

This article presents data on the evolution of top incomes andwages for 1922–2000 in India using individual tax returndata. The data show that the shares of the top 0.01 percent,0.1 percent, and 1 percent in total income shrank substantiallyfrom the 1950s to the early to mid-1980s but then rose again,so that today these shares are only slightly below what theywere in the 1920s and 1930s. This U-shaped pattern is broadlyconsistent with the evolution of economic policy in India: Fromthe 1950s to the early to mid-1980s was a period of "socialist"policies in India, whereas the subsequent period, starting withthe rise of Rajiv Gandhi, saw a gradual shift toward more probusinesspolicies. Although the initial share of the top income groupwas small, the fact that the rich were getting richer had anontrivial impact on the overall income distribution. Althoughthe impact is not large enough to fully explain the gap observedduring the 1990s between average consumption growth shown inNational Sample Survey–based data and the national accounts–baseddata, it is sufficiently large to explain a nonnegligible partof it (20–40 percent).