Assessing Income and Wealth Inequality: G20 Report

(Prelims: Current Affairs)

Context

A report by the G20 group, led by Nobel laureate Joseph Stiglitz, warns that global inequality has reached emergency levels.

This report was prepared by the G20's "Extraordinary Committee of Independent Experts on Global Inequality."
Its objective is to assess growing income and wealth inequality between and within countries.
This report was prepared under the South African G20 presidency.

The wealth of the top 1% of people in India increased by 62% between 2000 and 2023.
In China, this increase was approximately 54%.
The report says that while intra-country inequality has declined slightly due to rising per capita incomes in countries like India and China, inequality within countries has risen sharply.

Dominance of the Top 1%: Between 2000 and 2024, the top 1% of people concentrated 41% of global new wealth; while the bottom 50% received only 1%.
Poverty Reduction Stalled: Since 2020, the rate of global poverty reduction has virtually stalled, and poverty has risen again in some regions.
Food Insecurity: Nearly 2.3 billion people worldwide face moderate or severe levels of food insecurity.
Health Services: Half the world's population lacks access to basic health services, and 1.3 billion people are falling below the poverty line due to health expenses.

According to the report, countries with high income and wealth inequality are seven times more likely to experience weakened democracy.
This trend contributes to declining public trust, political polarization, and “elite capture” in governance.
Social Impact:
- Growing inequality increases discontent, distrust, and divisions in society.
- Social cohesion and public communication are weakened.
Economic Impact:
- Concentration of wealth limits consumption and demand.
- Human capital development is hampered.
- Inclusive growth is slowed.
Political Impact:
- The influence of the wealthy on policymaking increases.
- Access to equal opportunities decreases.
- Transparency and accountability in governance are reduced.

The report proposes the establishment of an International Panel on Inequality (IPI) to monitor inequality.
This panel will function like the Intergovernmental Panel on Climate Change (IPCC).
Its objective will be to provide governments with reliable data and policy guidance related to inequality.
This institution will be launched under the South African G20 presidency.

The report makes it clear that extreme inequality is not a natural process, but rather a consequence of policymaking. It can be changed through political will and global coordination.
For countries like India, this report is a warning that if income distribution is not balanced despite rapid economic growth, the goals of social stability, democracy, and inclusive development could be at risk
Moving towards “Developed India 2047,” India must ensure that the benefits of development are not limited to the top 1% but reach every citizen.