Advocates for a progressive wealth tax argue that such a measure is essential to address the growing economic inequality in India. The Centre for Financial Accountability's "Wealth Tracker India 2026" report highlights that 1,688 ultra-rich individuals hold wealth equivalent to nearly 50% of India's GDP, underscoring the need for fiscal reforms.
Proponents suggest that a 2%–6% levy on the ultra-wealthy could generate substantial revenue, estimated at over ₹10 lakh crore annually, which could be directed towards funding welfare programs aimed at uplifting the bottom 50% of the population, who currently hold just 15% of the national wealth.
Implementing such a tax is viewed as a step towards reducing the wealth gap and promoting social equity. By redistributing resources, the government could invest in education, healthcare, and infrastructure, thereby fostering inclusive economic growth.
While there are concerns about potential capital flight and its impact on investment, advocates argue that the long-term benefits of a more equitable society outweigh these risks. They emphasize that a well-designed wealth tax could be structured to minimize adverse effects on economic activity.