GS Paper: Inclusive growth and issues arising from it

Why in the News?

The UBS Global Wealth Report 2026 and recent labour metrics confirm a sharp divergence: global wealth surged by 10.8% in 2025, yet median wealth and general wages stagnated or declined for the broader workforce. In India, this concentration leaves the top 1% holding roughly 40% of total wealth, threatening to squander the country’s limited demographic dividend.

What does the wealth and wage data show?

1. Wealth concentration: The UBS Global Wealth Report 2026 records a rising number of ultra-wealthy individuals in India, indicating gains concentrated at the top.
2. Wage stagnation: The Periodic Labour Force Survey (PLFS) shows real wages for most workers remaining broadly flat, so the median worker’s income is not keeping pace.
3. Consumption skew: Demand is being led by premium goods and services bought by higher income groups, while mass consumption stays weak.
4. Indian Disparity: Corporate profits and billionaire wealth scaled historic highs, while ordinary wages and employment growth lagged behind. Data from the World Inequality Report highlights that India’s top 10% capture 58% of national income, while the bottom 50% receive only 15%.

Why is the divergence a structural concern?

1. Jobless quality of growth: Output growth is not translating into enough well-paying formal jobs, so income gains bypass most workers.
2. Technology displacement: Automation and artificial intelligence threaten routine information technology and services roles that earlier absorbed educated workers.
3. Weak gig protections: Platform and gig work has expanded without stable incomes or social security, leaving new jobs precarious.

Why does the demographic window make this urgent?

1. Closing window: India’s working-age population share will peak within a limited period, after which the dependency burden rises.
2. Wasted dividend: If the workforce is not absorbed into productive, rising-wage jobs during this window, the demographic dividend is lost.
3. Demand drag: Stagnant mass incomes weaken domestic consumption, which slows the very growth needed to create jobs.

Conclusion

The core problem is not the pace of growth but its distribution. Wealth is concentrating at the top while wages for the majority stagnate, and automation and weak gig protections deepen the divide. Converting growth into broad-based, rising-wage employment during the demographic window is the central challenge.

PYQ Relevance

[UPSC 2025] Inequality in the ownership pattern of resources is one of the major causes of poverty. Discuss in the context of ‘paradox of poverty’.

Linkage: It examines how unequal ownership of resources drives poverty and inequality. The article shows that rising wealth concentration alongside stagnant wages widens inequality, limiting inclusive growth and deepening the paradox of poverty.