India, China fail to expand benefits to people, says ADB study

India and China account for 64 per cent of GDP in 23 Asian countries included in a study but rank quite low when it comes to benefits percolating to their people.

While India ranks 18th, China ranks at 10th when it comes to benefits to the people in terms of living conditions according to a new study of the Asian Development Bank, "International Comparison Programme in Asia and the Pacific: Purchasing power Parity Preliminary Report".

This picture was evident when the size of the economies is adjusted by population. Rather than dominating the rankings, China and India drop to 10th and 18th positions, respectively, out of the 23 economies participating in the full GDP comparison.

Similarly, China ranks 15th and India ranks 17th when economies are compared based on "actual final consumption of households" (AFCH), a better measure of economic well-being of the population.

The AFCH is a measure of what households actually consume, comprising what they purchase and what they are supplied for individual use by the government (principally education and health). The economic well-being of the population is obtained by comparing household consumption expenditure per capita.

The five economies that top the list are Hong Kong, China (HK$125,303 per capita); Taipei,China (HK$109,108); Singapore (HK$99,706), Brunei Darussalam (HK$81,744), Macao and China (HK$67,639). A Hong Kong dollar is Rs 5.14. 
 

PURCHASING POWER PARITIES ADJUSTED INDICATORS
Country	Per Capita Real GDP (HK$)	Per Capita AFCH   (HK$)	RealPrice Level Index GDP (Hong Kong, China=100)
Bangladesh	7,245	6,553	48
Bhutan	20,903	12,346	49
Brunei	269,581	81,744	74
Cambodia	8,269	7,771	43
China	23,556	11,502	57
Fiji	23,583	25,235	117
Hong Kong (Ch)	202,941	125,303	100
India	12,070	9,346	46
Indonesia	18,427	15,089	55
Iran	60,857	42,945	41
Lao	10,361	7,203	38
Macao (Ch)	212,617	67,639	90
Malaysia	65,136	35,626	63
Maldives	""	14,360	""
Mongolia	15,104	10,530	47
Nepal	6,177	5,902	43
Pakistan	13,658	13,230	44
Philippines	16,663	14,145	54
Singapore	236,336	99,706	88
Sri Lanka	19,839	17,629	48
Taipei (Ch)	147,971	109,108	82
Thailand	39,086	28,917	54
Vietnam	12,295	8,541	40

The five economies that are at the bottom of the survey are Nepal, Bangladesh, Lao, China, Cambodia, and Vietnam. As for the people living in the two giant economies, a person living in China spends an average of only HK$11,502 per year, while an Indian consumes an average of HK$9,346 per year.

Purchasing Power Parities (PPP) is an idea popularised by The Economist's Big Mac Index which prices hamburgers in global cities for a quick and crude comparison of living standards. The ICP is more comprehensive as it covers a broader range of commodities.

Based on the price level index, which is the ratio of the PPP to the exchange rate, Fiji Islands and Hong Kong, China are the two costliest places to live in. They are followed by Macao, China; Singapore; Taipei and China.

China ranks eighth, and India ranked 16th in terms of PLIs. Price levels in the Philippines, Thailand, and Indonesia are very similar and are close to the Asian average. The cheapest places are Lao, Vietnam, Islamic Republic of Iran, Cambodia, and Nepal.

"The results provide the most comparable information on breakdown of GDP expenditures across the Asia Pacific," ADB Chief Economist Ifzal Ali says. "Purchasing Power Parities are a more appropriate currency converter to compare living standards and the structure of economies than market exchange rates."

The results are deployed for investment strategies, the global campaign against poverty and national policies such as appropriate spending on schools or infrastructure in Asia.

Using real GDP, estimates were done using assumed growth rates and how long it will take some countries to reach certain levels of per capita real GDP. For example, it will take the Philippines more than 20 years to reach Thailand's present per capita real GDP level if it grows at an average annual per capita rate of 3.7 per cent.

Looking at China, it needs only 16 years to reach the $HK100,000 per capita real GDP level but nearly 30 years to catch up with Brunei, based on an annual per capita growth rate of 9.2 per cent.

India needs more than 30 years to come up to the $HK100,000 per capita real GDP level, and almost 50 years to match Brunei's per capita real GDP, if India continues to grow at an annual per capita rate of 6.5 per cent.

The ICP Asia Pacific is part of a global initiative managed by the Asian Development Bank in collaboration with the ICP Global Office and other regional agencies across the world.

The ICP results, for the first time, enable a robust cross-country comparison of major macroeconomic indicators across diverse economies of Asia and the Pacific.