Per capita income crosses Rs 50,000 – HURRAY!

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February 1st, 2012 Tarun Chaturvedi

If India’s recent economic growth experience has been less spectacular than China’s, it has still been extremely impressive by the standards of most other developing countries in the same period and in comparison to its own past. This is, by and large, the opinion that has been doing the rounds across the globe ever since the “economic reforms” started in the country two decades ago. Data released yesterday shows that for the first time the per capita income at current prices is estimated at Rs 53,331 in 2010-11, against Rs 46,117 for the previous year, depicting a growth of 15.6%.

This huge increase is bound to be used in countless presentations, talks etc. by the policy planners as a showcase for the success of the economic policies being pursued by the nation. There is no doubt that this is an impressive achievement but it should not be used to draw any conclusions. The figure surely gives an idea of the standard of living of the people, though much of the growth in income may have been driven by the richest Indians – which is a fact. And it is this fact which is the reality of the country. Growth in GDP, per capita income etc are the indicators which reflect on the income poverty of the country and India is doing fairly well on these measures. However, the real well-being of a nation needs to be measured by human poverty indicators and not the income poverty indicators.

Human poverty indicators in India suggest a totally reverse picture of the economy. India has never been a good performer in human development terms. Overall, both health and education indicators (one of the best measures of human poverty) have lagged well below those in other countries at similar levels of development and with similar per capita incomes. A few weeks back the prime minister had released a report on the extent of child malnutrition in India and the outcomes of the report forced him to term the malaise of child malnutrition as a national shame. Recent data released by the UN has placed India as the worst performer in child mortality sex ratio, even worse than its neighbours like Sri Lanka and Pakistan. A recent report on inequality released by OECD mentioned that income inequalities have gown in India over the last two decades. In fact none of the reports cited above are contrary to the ground realities in India.

It is a paradoxical situation, the income indicators and the human indicators show divergent outcomes. The benefits of the income growth have not impacted the human indicators. Clearly, increasing inequality is an important factor, since it has meant that the benefits of the growth have been concentrated and have not “trickled down” (a.k.a top-down approach) sufficiently to ensure improved consumption among the lower income groups. The policy planner should not forget that the common man is benefitted only when the income growth impacts his daily life. In fact, it seems that the government has lost total connect with the common man who is supposed to be the ultimate beneficiary of all income growth.

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One Response to “Per capita income crosses Rs 50,000 – HURRAY!”

  1. Bango Says:

    74000 is a good range to be at.

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