Per Capita Income: India is currently the President of the powerful G-20 grouping and has undoubtedly become the leader of the Global South. India’s stature on the global stage has been rapidly rising. This has enhanced both India’s hard power and soft power. But as they say, to sustain this rise in global clout, India has to back it up with a sound economic foundation and all-round prosperity within the nation.
This is why the mantra of the Modi government since assuming power, has been to focus on holistic economic growth. For this, it has been taking a slew of measures that can propel India into the top three leading economies in the world. During his tenure, Prime Minister Modi has moved India from the notorious fragile five list to a preferred ‘investment destination’.
The National Statistics Office (NSO) is India’s premier organization for data and statistical collection. NSO data is much anticipated among the economist fraternity to analyze the trajectory of the nation’s growth. The latest data by the NSO underline the economic progress India has undertaken under the leadership of PM Narendra Modi in the last nine years.
From Strides to Leaps: Per Capita Income of India Doubles under the Modi Government
As per the latest data released by the NSO, per capita income of India has almost doubled during the tenure of PM Modi. The NSO data revealed that per capita income of India (in nominal terms) increased from Rs. 87,748 in 2014–15 to Rs. 1,85,534 in 2019–20.
With this, the per capita income of India in nominal terms has seen a sharp increase of almost 99%. This is, in fact, a remarkable achievement of the Modi government.
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As per the NSO, per capita income of India at current prices or in nominal terms stood at 1,27,065 and 1,48,524 during the financial years 2020–21 and 2021–22, respectively.
Nominal vs. Real Data: Inflation: The Deflating Factor
Before moving ahead, let’s recap the basics first. Any data in nominal terms means that it has included the effect of inflation. On account of rapidly varying inflation, the comparison of two sets of data from different time periods becomes a challenging task. As a result, data in real terms or constant price are used for comparison because they exclude the deflating factor, namely inflation.
To make accurate assessments of changing economic performance or parameters like measuring the changes in per capita income or GDP growth, the use of real-term or constant prices becomes important and is preferred by several economists.
While per capita income of India has increased by a whopping 99% or simply doubled under the Modi government, it has seen a massive jump in real terms as well. In real terms, or at constant prices, the per capita income has increased by almost 35 percent. Earlier, it was pegged at Rs 72,805 in 2014–15; now it has jumped to Rs 98,118 in 2022–23.
Average annual increase in per capita income in real terms
As per the World Development Indicator Database, the average growth of India’s per-capita income in real terms was 5.6% per annum between FY 2014 and FY 2019. This clearly means that India has seen a consistent rise in per capita income.
Renowned economist Pinaki Chakraborty, the former director of the top economic research institute NIPFP, lauded this achievement. He stated that if India sustains a per capita income between 5% and 6% per annum and takes appropriate redistributive policies, it will support India’s growth ahead.
He said, “Sustaining per-capita income growth at 5 to 6 percent per annum with appropriate redistributive policies will help sustain this momentum. We also have to factor in uneven growth within the country. Balanced regional development will act as a catalyst for higher growth.”
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It is worth noting that most of the leading economies could not navigate the turbulence caused by the COVID pandemic and the Ukraine-Russia crisis well. NSO data revealed that the Indian economy too suffered a massive hit because of the pandemic, but it soon recovered on account of prudent economic policies followed by the Modi government.
As per the NSO data, per capita income of India fell during the COVID period, both in real as well as nominal terms. Later, it saw an increase in FY 2021–22 and FY 2022–23.
Economist Pinaki Chakraborty added that “this growth in per capita income is significant. We have seen improvements in outcomes related to health, education, and economic and social mobility. COVID impacted us badly. However, we have seen significant economic recovery after COVID.”
Will the upward trend continue?
The Indian economy is well placed to remain the fastest-growing major economy in the world. In spite of the global challenges like the Ukraine crisis, the uncertainty of a recession looming over the global economy, and the debt crisis affecting countless nations.
As per IMF projections, India overtook the UK to become the world’s fifth-largest economy. Currently, it is behind only the US, China, Japan, and Germany. A decade earlier, the Indian economy was not among the top 10 major economies in the world. It was placed in the dismal position of 11th rank, and the UK was the fifth largest economy at that time.
However, some economists have sidelined this major achievement of increased per capita income. They argue that challenges of uneven income distribution still persist in the Indian economy. However, there is no denying the fact that this is a major accomplishment that has seen major changes in the lifestyle of common Indians, from welfare schemes to universal health coverage, among others.
The proactive steps of the Modi government made it possible
Economists highlight the major schemes and policies that have yielded this positive change. Several pro-poor initiatives and last-mile delivery of welfare schemes to the needy, have greatly benefited the common people. These steps include the opening of Jandhan accounts, which was a massive financial inclusion drive undertaken on an unprecedented scale. Further, it also includes schemes like MUDRA loan, a focus on digitisation, and free distribution of rations under the Right to Food programme.
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As per the NSO and economists, the increase in per capita income is a result of various government policies, like the implementation of the Goods and Services Tax (GST), demonetization, and the push towards digital payments. With such initiatives, the Modi government has helped to formalize the economy, boost tax revenues, and reduce corruption.
The sustained economic progress in the coming years will help India achieve its objective of becoming a responsible global power that will act as the voice of the voiceless nations and the leader of the Global South.
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