SBI Research Disproves K-Shaped Recovery, Notes Declining Income Inequality
The Economic Research Department of SBI refutes the notion of a K-shaped recovery in India, indicating a decline in income inequality and a significant shift of taxpayers toward higher income brackets. The report, countering the K-shaped recovery narrative, notes substantial changes in income distribution metrics.
The Gini coefficient, a prevalent measure of income inequality, has notably reduced from 0.472 to 0.402 between FY14 and FY22, indicating a decline in income disparities among taxpayers. Furthermore, 36.3 per cent of taxpayers have moved up to higher income brackets, generating a 21.3 per cent increase in income, while contributions from the top 2.5 per cent of taxpayers have decreased from 2.81 per cent to 2.28 per cent during FY14-FY21.
The report emphasises positive shifts, such as 19.5 per cent of small firms transitioning into larger entities through MSME integration and a noteworthy increase in consumption among the bottom 90 per cent of the population following the pandemic.
Rural income growth has spurred a trend of switching from two-wheelers to four-wheelers. It's also highlighted that 15 per cent of taxpayers in India are women, while two crore family members from semi-urban areas are availing themselves of food services through Zomato.
This analysis, based on publicly available income tax data, brings to light the migration of taxpayers to higher income categories. Data shows a surge in individual taxpayers earning between Rs 5 lakh and Rs 25 lakh, signaling a positive trend in income mobility.
The Gini Coefficient's projection suggests a further reduction in income inequality, estimated to decline to 0.402 in AY23. The report underscores significant shifts in income groups, with a substantial portion migrating to higher income brackets across assessment years.
Furthermore, it outlines a decline in income disparity among those earning less than Rs 3.5 lakh and highlights a decrease in the combined income share of top earners. The post-pandemic scenario indicates a shift in household savings towards physical assets, particularly real estate.
