New Delhi: The case of the mismatch between the earnings of the majority of the billion plus Indians versus a tiny majority of India’s uber rich is no hidden secret. Sadly, the government does not realise this, or so it appears from the numbers doled out recently.
According to income tax data released by the Finance ministry last week, only 18,359 individuals have annual earnings of Rs 1 crore or higher in 2011-12 and paid tax on it. While that may seem to be a miniscule number in itself, a look at the sales data of luxury car makers – Audi, BMW, Mercedes-Benz and Jaguar-Land Rover – lends credence to the mismatch.
The luxury car makers reported cumulative sales of 25,645 units in 2011-12 (the same period corresponding to the government’s estimate of millionaires). The average price tag of these cars is approximately Rs 40 lakh each.
The two sets of data only show how deceiving these numbers may be. Significantly, it blows holes in the government’s official approximation of the number of taxpayers.
Also read: Over 55 per cent individual assesses paid no tax: Finance Ministry
There are many such examples that show such deceptive facts. For instance, in a report by The India Express in Mumbai, an estimated 1,880 luxury apartment units in the price range of Rs 10 crore-Rs 100 crore price bracket were reported to have come up for sale.
Also in Delhi, DLF Emporio, one of the malls which boasts of the maximum luxury products, reported revenue from operations totalling Rs 113 crore and a net profit of Rs 61 crore in 2012-13.
However, the report by the government estimates 18,359 people earning Rs 1 crore and paying taxes on their income.
“The number of 18,359 for those reporting income of Rs 1 crore plus looks like an understatement because it does not link well with other data such as the sales of only luxury cars. Similarly, even if you look at business-class airline travel, or hotel occupancy, the number of 1 crore-plus income seems to have been understated 10 times, if not more,” Arvind Singhal, Chairman of retail consulting firm Technopak, was quoted as saying in the report.
Besides the mismatch cited through data by different sectors, the estimation of wealth in India by financial institutions also presents a different picture. For example, a 2013 Kotak Wealth Management and CRISIL report titled ‘Top of the Pyramid’ estimated the number of Indian ultra-high net worth households — each with a minimum net worth of Rs 25 crore — at 81,000 in 2011-12, a growth of 30 per cent over the previous year.
Similarly, a survey conducted by Mastercard reported that more consumers in India were planning to buy luxury goods over the next year.
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