Asset Inequality in India: Going from Bad to Worse

Assets are an important indicator of economic well-being of households. Acquired through inheritance, gifts (including dowry) and accumulated savings, assets provide means of livelihood as well as security against adverse economic shocks. In his widely acclaimed recent book, Thomas Piketty has argued that inherited assets across generations are an important source of perpetuating inequality of wealth and income around the world (Piketty, 2014).

At the macro level, studies have found that asset and income inequality have a negative impact on growth (Benabou, 1996; Alesina and Rodrik, 1994; Birdsall and Londono, 1997). Of various studies that have analysed distribution of wealth and assets at household level, Takayama (1994) for Japan, Carney and Gale (2000) for the United States and Davies et al. (2009) for 38 countries in the world are particularly noteworthy. For India, ownership of assets has been studied by Vaidyanathan (1993), Subramanian and Jayraj (2006) and Jaydev et al. (2007). Following this strand of literature, this paper presents various aspects of asset inequality of Indian households, separately for rural and urban households. We use household-level data from three consecutive rounds of the All India Debt and Investment Survey (AIDIS), pertaining to the years 1991–92 (48th round), 2002–03 (59th round) and 2012–13 (70th round), thus covering a period of roughly two decades.