If income is one of the loudest signals in a democracy—of ambition, of merit, of contribution—then economist Ram Singh’s recent research paper reveals how that signal can be quietly manipulated or even erased by those who command significant wealth.
A recent paper shows that India’s richest report only a fraction of their income and wealth, enabling a culture of tax avoidance
If income is one of the loudest signals in a democracy—of ambition, of merit, of contribution—then economist Ram Singh’s recent research paper reveals how that signal can be quietly manipulated or even erased by those who command significant wealth.
In his paper “Do the Wealthy Underreport Their Income? Using General Election Filings to Study the Income-Wealth Relationship in India”, Singh, who is director at the Delhi School of Economics, dives into sworn affidavits filed by thousands of candidates contesting India’s general elections, the Forbes list of India’s richest families and income tax return data. What he uncovers is a vast, hidden architecture of avoidance.
Using real-world data, the study offers an uncomfortable but unavoidable conclusion: the richer a person is in India, the less likely it is they report all earnings. A 1% increase in family wealth, Singh finds, is associated with more than a 0.6% decrease in the income-wealth ratio. Among the top 0.1%, the reported income amounts to less than 2% of their total wealth. For the crème de la crème of Indian wealth—the top ten families on the Forbes list—it’s barely 0.5%.
This isn’t simply about loopholes or clever accounting. It’s about a structural rot that undermines how we measure fairness in a society. Singh’s study lifts the curtain not only on what is hidden, but also on what is missed when researchers, journalists and governments rely purely on tax liability, inequality and growth data. In India, the numbers speak—but not all of them tell the truth.
Singh’s methodology uses affidavit data—legal disclosures that India’s election candidates must submit, listing their income and assets. These declarations, underexplored by scholars, offer a dual lens into both what people claim to own and what they say they earn.
Unlike leaked documents or speculative estimates, these filings are sworn statements—backed by threat of legal penalty—providing Singh with a starting point that is both grounded and difficult to dispute. By merging this data with national income statistics, income tax records and even firm-level information from databases like Prowess, Singh constructs a picture of economic behavior that is both unusually granular and disturbingly revealing.
His key insight is mathematical, but the implications are moral. At the bottom end of the wealth spectrum, reported income often exceeds wealth—suggesting limited savings or asset ownership.
But as you climb the ladder, the ratio flips dramatically. The top 1% reports incomes that are only 3–4% of their wealth. The richest 0.1% drops to 1.5–2%. And the super-rich, the kind that dominates India’s business pages and global rankings, report income that amounts to just 0.5% of their holdings.
In other words, the wealthiest Indians are not India’s biggest earners—at least not on paper.
Singh quantifies the missing income, distinguishing between direct capital incomes—rents, dividends and realised capital gains—and indirect or unrealised income, like asset appreciation. Even if one sets aside the fuzzier indirect returns, Singh shows that reported capital income falls woefully short of what India’s wealthiest should be declaring. Based on average national returns, he estimates that the top 5% of households report only about one-third of their capital income. For the top 0.1%, it’s just one-fifth.
There are two ways to read this. The charitable view is that India’s richest investors are chronically underperforming—unable to get even 2% returns on vast empires of real estate, equity and business holdings.
The more likely explanation would be a widespread, systemic strategy of underreporting.
Tax avoidance is only part of the story. Singh presents evidence of full-blown tax evasion. Certain asset classes are favoured not for their returns but for the opacity they offer. Real estate and unlisted equity emerge as the wealth whisperers of choice—easy to buy, hard to track and harder still to audit.
The top 1% reports incomes that are only 3–4% of their wealth. For the richest 0.1%, this drops to 1.5–2%. And the super-rich report income that amounts to just 0.5% of their holdings
Profession and gender also play a role. Politicians and agriculturists report relatively low incomes, while those exposed to greater media and civil society scrutiny report higher incomes. In the case of women, the reasons are more structural than strategic.
Even when wealth levels are held constant, women tend to report less income—reflecting adverse labour market conditions, lower wages and reduced participation in formal economic activity. Moreover, the assets women typically hold—such as jewellery—yield lower or negligible financial returns compared to the equity and real estate portfolios more common among men.
These patterns suggest that income reporting is shaped not only by tax incentives but also by deeper power structures, gendered asset ownership and social visibility—where being under the radar is not just a choice, but often a consequence of one’s place in the economy.
Beyond Singh’s technical analysis lies a question that should haunt every policymaker: If tax data can’t be trusted to reflect true income, how flawed are our estimates of inequality, redistribution and economic justice?
The paper’s most devastating implication is this: India’s tax regime, far from being progressive, becomes regressive at the very top. Singh calculates that the wealthiest 0.1% pay income tax amounting to just 0.7% of their wealth.
The top families on the Forbes list? A meagre 0.4%. By contrast, middle-wealth households pay a larger proportion relative to their wealth—an inversion of the principle of progressive taxation.
This is not a glitch. It is a feature of a system that has, whether through negligence or design, allowed capital to hide in plain sight.
Perhaps the most damning takeaway is not that the rich underreport their income. It’s that the government, the public and even much of the research community are willing to take reported numbers at face value. Singh’s study is not a call for tax reform. It is a challenge to the way we measure tax liability, inequality and by extension, economic justice.
Interestingly, Singh notes that recent policy measures by the Indian government—aimed at curbing illicit income and wealth hoarding—may be showing early signs of effectiveness. Still, these gains coexist with entrenched opacity at the top, suggesting that while the system may have been nudged, it is far from being overhauled.
In a country where economic ambition is celebrated and entrepreneurial success is valorised, Singh’s findings remind us that beneath every dazzling headline about rising billionaires lies a quieter, more persistent truth: real power is not in how much you earn. It’s in how much you can afford to hide.