Views & Reviews
India’s Economy and Per Capita Income on Right Track of Growth but Holy Grail Missing
And it is not just in science where India is taking big leaps. The Indian economy, according to IMF estimates, will emerge as the world’s third largest economy by 2027, hopping over Japan and Germany, as its GDP crosses US$5 trillion dollars. By 2047, India will be on the path to almost touch the status of a developed economy. India’s economic expansion continues in mid-2023.India grew 7.8% in the first quarter i.e. Q1FY2024. Global off shoring, digitalisation, investment in manufacturing and energy transition are revving up India’s economic growth. Private sector investment grew 7.8% YoY, thus maintaining the steady momentum of the past five quarters, aided by the crowding-in effect of higher capital expenditure by the government. The highlight was probably the strong revival in private consumption by 6 % after its lacklustre growth for two quarters. One notable factor contributing to India’s growth is the increase in imports of capital goods, which surged by almost 20 percent in FY23 compared to the previous year. This indicates improved private sector capital formation and signals confidence in the country’s economic prospects.
As per the National Statistical Office (NSO), the annual per capita (net national income) at current prices is estimated INR 1,72,000 in 2022-23, up from INR 86,647 in 2014-15, suggesting an increase of about 99 per cent. The country’s per capita income is likely to grow by close to 70 per cent to USD 4,000 by fiscal 2030 from USD 2,450 in fiscal 2023, helping it become a middle-income economy with USD 6-trillion GDP, more than half of which will be coming in from household consumption, says a research report. The analysis by Brookings Institution reveals that between 2010 and 2019, per-capita GDP growth in India was higher than that in China for the first decade after the 1960s. Between 2010 and 2019, India’s purchasing power parity (PPP) per capita income grew at 5.2 percent versus 4.5 percent in China.
GDP or the size of the economy or per capita income does not measure the true development of a nation. “Holy grail” i.e. decent access to nutrition, shelter, healthcare, and education to the poorest children is the true assessment of a nation’s progress. Despite growth in GDP, big size of economy and growing per capita income, inequality in consumption continues, with a Gini index of around 35 over the past two decades. Child malnutrition has remained high, with 35.5 percent of children under the age of 5 years being stunted, with the figure rising to 67 percent for children in the 6-59 months age group. Headline employment indicators have improved since 2020 but concerns remain about the quality of jobs created and the real growth in wages, as well as around the low participation of women in the labour force.
The growth of the past two decades has led to India making remarkable progress in reducing extreme poverty.
Employment must come out of increased growth. Employment enhancement without growth is not sustainable. India needs to absorb the new technologies that have emerged and that will emerge and skilled manpower which is consistent with this development though the new technologies may lower the employment elasticity with respect to output.
Prof. Mithilesh Kumar Sinha
Department of Economics
Nagaland University, Lumami