The existing research literature on studying this nexus, is usually in the context of a “Financial Kuznets Curve(FKC) hypothesis” or “Non-linearity hypothesis”. This curve, is a simple plot with financialization on the X-axis and Income Inequalty on the Y-axis. A typical FKC must exhibit an “inverted U” shape. In simple words, income inequality rises initially uptill a turning point, and then drops steeply. Now, the reasoning behind this shape can be attributed to progressive taxes, government income redistribution efforts, advancement of financial sectors covering all income groups and so on, that lead to the downward tract from the turning point.

It is evident that this does not hold true for India. A report by Oxfam puts forward that Indian billionaires increased their wealth by a staggering 35% during the COVID pandemic, the very periods where an economic slump was in play. These were the times when the wealthiest escaped the wrath of the pandemic and the poor faced unemployment, poverty and worse, death. Studies focus on fitting regression equations. Income inequality, is influenced by a basket of factors, financialization being one of them.

A very relevant and recent study for India found that, financial development, inflation and economic growth too, aggravate income inequality. It is a compelling time to reframe and formulate wealth and capital taxation policies, and better income distribution measures.

India is yet in the initial steps pertaining to financialization. Income concentration or pooling is a visible phenomenon. Better taxation regimes, increasing the spans of alternative finance, and assessing other contributing factors toward inequality are the right steps ahead.