Title

Capital and the Hindu rate of growth: Wealth concentration in newly independent India 1961-1986

Document Type

Unpublished Paper

Publication Date

Fall 2017

Abstract

I provide estimates for the size and importance of top wealth-holders in India during the stagnant growth phase before the early 1990s liberalization. Relative to national income which famously grew at The Hindu Rate of Growth, my paper suggests a large and fast decline in the wealth of India's Top 0.1%. Due to the effects of inflation, progressive property taxation and nationalization much of incumbent private wealth was dismantled. New wealth was made of movable assets which unlike urban and agricultural land actually recovered in value. I offer explanations of these transformative dynamics based on the attitudes of the Indian state during and prior to the reign of Indira Gandhi. The results link the composition of the rich in colonial India versus post-liberalization India with important implications for wealth inequality, the equalizing forces inherent in tax policy and the role of the state in regulating social disparities.