A low per capita income indicates that India’s economic growth has not been substantial
India has had a high growth trajectory in recent years and is the fourth largest economy in terms of GDP measured on the basis of purchasing power parity. However, when it comes to per capita income the country ranked 127th out of 181 countries in 2009. According to the International Monetary Fund (IMF) data, China, the world’s most populous nation, has almost double the per capita income of India. What is more remarkable is that China, with its sustained high economic growth and lower population growth, has moved up from 128th rank in 1984 while India has moved down from rank 117 over the same period.
A look at the state-level data enables one to identify areas that contribute largely to India’s poor performance. Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh were once referred to as BIMARU states since they were lagging in terms of development and retarding India’s overall economic progress. Though, the concept of BIMARU barely holds together now, particularly with the current upsurge in Bihar’s economy, the fact remains that these states continue to have a low per capita income. According to the recent CSO estimates, while the per capita income in India in 2009-10 is estimated at Rs 46,492, in Bihar it is merely Rs 16,119. Bihar continues to trail way behind Uttar Pradesh, which has the second lowest per capita income of Rs 23,132. Manipur, Madhya Pradesh and Assam are the other three states with per capita incomes of less than Rs 30,000 per annum. Rajasthan is relatively better off than these states with per capita income of Rs 34,189, though this is still lower than the national average. Among the newer states, we find that Jharkhand and Chhattisgarh lag the national average, while Uttarakhand is better placed with the twelfth highest per capita income. At the other end of the per capita income table are states with a small population base — Goa, Chandigarh and Delhi are the only three states with per capita income exceeding Rs 1 lakh per annum. Haryana and Maharashtra are among the bigger states with an annual per capita income of more than Rs 70,000. (Click here for chart)
| THE INCOME GAP Nations ranked on the basis of GDP in terms of purchasing power parity | ||
| Country | Per capita GDP-PPP in 2009 (current international dollar) | World rank |
| Singapore | 50,180 | 4 |
| United States | 45,934 | 6 |
| Brazil | 10,499 | 76 |
| South Africa | 10,229 | 77 |
| China | 6,778 | 97 |
| Sri Lanka | 4,764 | 113 |
| India | 3,015 | 127 |
| Pakistan | 2,683 | 133 |
| Bangladesh | 1,487 | 154 |
| Source: World Economic Outlook October 2010, IMF | ||
Looking at the annual growth in real per capita income since 2004-05, the state of Uttarakhand has shown the best performance with a double-digit growth. Maharashtra comes second, with Bihar trailing slightly at the third position. Tamil Nadu, Gujarat and Haryana have all achieved more than 7.5 per cent annual growth in real per capita income over the period. However, Punjab has turned in a below average performance on the growth front. It is disappointing to see Assam at the bottom of the growth performance chart; Uttar Pradesh, Madhya Pradesh and Rajasthan also have a lower than average growth record. This is a cause for concern given their huge population.
India’s low per capita income clearly indicates that the growth in the economy has not been substantial enough to meet the needs of an increasing population, even as the vast regional differences cause imbalances that need to be addressed urgently.
Indian States Development Scorecard is a weekly feature by Indicus Analytics that focuses on the progress in India and the states across various socio-economic parameters
