India’s GDP Milestone Masks Grim Reality of Growing Wealth Disparity

NITI Aayog recently announced that India has surpassed Japan to become the world's fourth-largest economy. According to the latest World Economic Outlook Report by the International Monetary Fund (IMF), India's GDP is set to surpass that of Japan by the end of the financial year 2025-26.

While the Central government has publicized the economic achievement widely, a deeper look into India's financials paints a concerning picture. India might be set to become the fourth-largest economy in the world, but the rich continue to get richer, while the poor get poorer.

According to Hurun, there are 1,539 wealthy people in the country, whose collective worth is over Rs 159 lakh crore. Their assets are reportedly growing at an annual rate of 46%. Reports suggest that 40.1% of the country's wealth is concentrated in the hands of 1% of the population, leaving the underprivileged to fend for themselves.

Recently, former MD of the World Economic Forum (WEF), Claude Smadja, echoed these concerns and warned India against being complacent.

He pointed out that while India's GDP at $4,187 billion is higher than Japan's $4,186 billion, a closer look at the per capita GDP reveals the reality. As per IMF April 2025 statistics, India's GDP per capita stands at $2,874.4 – just 8.5% of Japan's $33,955.7. The figure highlights that people in Japan earn approximately 11.8 times more than their Indian counterparts.

Congress leader Jairam Ramesh had recently observed that India’s economic inequalities under the Narendra Modi government have surpassed that of the colonial British era.

Besides creating a misleading image of the country's economy, wealth disparity can cause several issues, from social to economic and political ramifications.

Social Issues

1. Inequality and unfairness: Wealth concentration among a few individuals can create social unrest and feelings of injustice.

2. Limited access to education and healthcare: Those with lower socioeconomic status may struggle to access quality education and healthcare, perpetuating cycles of poverty.

3. Increased poverty and homelessness: Wealth disparity can lead to increased poverty rates, homelessness, and food insecurity.

Economic Issues

1. Reduced economic mobility: Wealth disparity can limit opportunities for social mobility, making it challenging for individuals to improve their economic status.

2. Decreased consumer spending: When wealth is concentrated among a few, it can lead to reduced consumer spending, potentially slowing economic growth.

3. Increased debt and financial instability: Those struggling to make ends meet may resort to debt, leading to financial instability and increased risk of financial crises.

Health Issues

1. Poor mental and physical health: Wealth disparity can lead to increased stress, anxiety, and depression, negatively impacting mental and physical health.

2. Limited access to healthy food and living conditions: Those with lower socioeconomic status may have limited access to healthy food, safe living conditions, and healthcare.

Political Issues

1. Influence on policy-making: Wealth disparity can lead to undue influence on policy-making, perpetuating inequality and favoritism.

2. Social unrest and conflict: Extreme wealth disparity can lead to social unrest, protests, and conflict.

Addressing the Growing Wealth Disparity

Resolving economic disparity requires a multi-faceted approach, including policy interventions, progressive taxation, and social welfare programs, alongside improving access to quality education and skill training.

Other strategies could include the government encouraging corporate social responsibility and community development initiatives.

Implementing these strategies requires a collaborative effort from governments, businesses, and civil society organizations. As India aims to become a $7 trillion economy by 2027, it is crucial for policymakers to address deeper societal issues instead of focusing on selective data that portray the country in a good light.