French economist and author Thomas Piketty has suggested that India should raise taxes on its wealthiest citizens to reduce the growing inequality in the country. He made these comments at an event hosted by the Research and Information System for Developing Countries (RIS) and the Delhi School of Economics on Friday.
Piketty, who is best known for his book Capital in the 21st Century, said that India should be proactive in taxing its super-rich citizens. He pointed to a recent agreement made by G20 finance ministers to work together on effectively taxing global wealth. He said India could raise annual revenue worth 2.73% of its gross domestic product by imposing a 2% wealth tax on people with assets of more than 100 million rupees ($1.18 million), and a 33% inheritance tax on property worth at least the same amount.
Rising Inequality in India
Piketty also shared troubling findings from a 2024 report he co-authored, which showed that the wealth gap in India is now worse than in the United States and Brazil. According to the report, in 2022-23, the richest 1% of Indians controlled 22.6% of the country’s income and owned 40.1% of its total wealth. This is a larger share than the top 1% in both the U.S. and Brazil.
India’s richest citizens have become even wealthier in recent years. A report from Forbes stated that the total wealth of India’s top 100 billionaires grew by over $300 billion, reaching $1.1 trillion, mainly due to a booming stock market.
Government’s Resistance to Wealth Taxes
However, despite Piketty’s recommendations, India’s government has shown little interest in reintroducing wealth or inheritance taxes. Chief Economic Adviser V. Anantha Nageswaran, who also spoke at the event, argued that higher taxes on the rich could cause capital (money) to leave India, which might hurt the economy.
India had abolished its wealth tax in 2015, and the government has resisted calls to bring it back or introduce an inheritance tax. Finance Minister Nirmala Sitharaman said earlier this year that an inheritance tax could negatively impact middle-class families, making it harder for them to pass on savings or small pieces of land to their children.
Piketty’s comments have reignited the debate about how to reduce inequality in India. Supporters of his idea argue that taxing the wealthy could help close the huge wealth gap in the country, but opposition from key policymakers suggests that these measures are unlikely to be adopted in the near future.
