The unearned income factor aggravating rich-poor divide

It is elastic demand that may fuel furious buying, but then how many washing machines does one expect the housewife to buy in her lifetime?

- S Murlidharan is a freelance columnist and writes on economics, business, legal and taxation issues.

nalyses based on the World Inequality Database and other studies, such as one by the World Inequality Lab, indicate that the top 1% of India’s population controls over 40% of the country’s wealth and holds 22.6% of the total income, representing the highest concentration of wealth in decades.

Resultantly, there is a significant and ever-burgeoning wealth gap, with the bottom 50% of the population holding a much smaller share of the national wealth and income. The USA, too, suffers from terrible lopsided distribution of income and wealth, but the focus of this article is purely on India.

At the root of the problem is the phenomenon of unearned income—a hardworking labourer in a farm or factory eking outa paltry Rs 500 a day, whereas a film star-turned-quizmaster demanding and reportedly getting Rs 7.5 crore per episode. Recently, actor Akshay Kumar went on record saying, “L have Rs 2000 crore in fixed deposits,” a target he was wistfully wanting to achieve. He had posthaste added that he had worked hard for it. Really? Don't celebrities, especially film stars and cricketers, get overpaid several thousand times over, maybe, thanks to the peculiarities of the industries they are in?

Mark Mascarenhas of WorldTel guaranteed Sachin Tendulkar a minimum of Rs 100 crore over five years for his endorsements, beginning with a deal in 2001 that transformed the sports marketing landscape in India. This revolutionary contract established Tendulkar’s unparalleled brand value, proving that cricketers could be as influential as Bollywood stars in the advertising world. Flush with the excitement on reaching the milestone, Tendulkar said he could now concentrate on the game!