Ten reasons why Piketty’s paper goes wrong on Indian inequality
Recently, a working paper titled ‘Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj,’ by Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty and Anmol Somanchi was released. Sections of the Indian media lapped it up, forgetting that it is not a peer-reviewed paper; nor has it been published by any reputed journal. We present arguments here in the hope that it will leave readers better informed on inequality in India.
One, the authors have combined many different data sets and engaged in interpolations and extrapolations to arrive at their conclusions without reflecting much on the compatibility and consistency of data. Yet, it is surprising that, despite the availability of a new Household Consumption Expenditure Survey (HCES) 2022-23, they ignore and relegate it to a footnote (No. 11).
Readers can refer to our article (alturl.com/8zm3g) on it. Two, for 2017-2022, the paper uses consumption data from the Periodic Labour Force Survey (PLFS), which is not comparable with HCES data. The authors account for it by using 2017-18 HCES data from leaked reports that had serious quality issues.
The International Labour Organization acknowledged, “In the model of labour force participation, the PLFS observations for 2018 and 2019 have been excluded as they appear to present limited comparability with both the previous NSS results and the newer PLFS results." Three, the paper adjusts wealth distribution at the top end using Forbes’ and Hurun’s list data, which includes stock market wealth as a part of net worth. For venture capital (VC)-funded firms, non-market implied valuations are also considered. The top percentiles’ rise in wealth is attributable to greater financialization of the Indian economy, a
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