Wg Cdr Mahesh Chander Sudan (Retd)
We, the people of India, have recently passed through a proud moment when our economy surpassed the economic might of United Kingdom and occupied place of fifth largest economy of the world. Co-incidentally, the growth rate of our economy for quarter ending Apr-Jun also stood 13.5% reaffirming economic resilience especially at the time when it has hardly achieved V shaped recovery post COVID – 19. It is a matter of pride for each one of us who has been contributing towards economic growth of the country in our own way either directly or indirectly. To sustain the growth pattern and to move upward with stabilized momentum, it calls for introspection to reassess our growth pattern sector wise so that optimum participation of able bodied work force is ensured in future economic journey of the nation. Another cause of concern that needs to be focused remains on per capita Gross Domestic Product that stands quite low in comparison with other contemporary economies of the world.
As per recent IMF projection, USA holds first place followed by China, Japan, Germany and India. Biggest economies in the year 2022 by gross domestic product in terms of trillion USD as published in CEOWORLD Magazine shows USA as 25.3, China as 19.9, Japan as 4.91, Germany as 4.25 and India as 3.53 (fifth place). The rise in the size and position of Indian economy though shows positivity and conveys sense of diligent economic policy discipline but it losses its sheen when it comes to Per Capita GDP that stands at $ 2500 as compared even to sixth largest economy of UK that is $47000 and $76000 of USA according to the IMF as of April 2022 where as China has logged around $11800. Let us understand that the per capita Gross Domestic Product (GDP) is a financial metric that breaks down a country’s economic output per person and is arrived at by dividing the GDP of a nation by its population. At its most basic interpretation, per capita GDP shows the economic production value attributable to each individual citizen. It is a global measure for gauging the prosperity of nations and is used by economists to analyze the prosperity of a country based on its economic growth. There are few ways to analyze a country’s wealth and prosperity and per capita GDP is the most universal as its components are regularly tracked on a global scale with ease of calculation and usage. It therefore infers that GDP and population of a country are factors in the per capita equation that means countries with highest GDP may or may not have highest per capita GDP. However, a logical comparison could be drawn with China whose population is almost equal to ours, and both the countries have attained independence almost at the same time. Even this somewhat logical comparison in terms of per capita and National GDP prominently works in favour of China that stands four times higher than ours.
It is amply clear that the gauge used universally in measuring the level of prosperity of a nation and her citizens is through per capita and national GDP based on economic growth vis a vis population of a country. There is another measure for global prosperity analysis based on per capita income which is less broadly used in the world. It is also worth noting that Luxembourg, Ireland and Norway are the highest GDP per capita countries where as they are nowhere in the list of top ten big economies of the world.
The issue that concerns us most and affects ordinary citizens besides moderate GDP per capita is inequality in distribution of income as GDP conveys a gross view of an economy whereas per capita income guides us towards better understanding of the economic conditions. In this regard one may refer to World Inequality Report 2022 that shows 57% of national income is held by top 10% population while bottom 50% population has 13% national income at their disposal. It is worth mentioning here that government can use per capita GDP to understand how the economy is growing with its population. This analysis of GDP per capita on a national level provides insights into a country’s domestic population influence. At the same time, there are some other variables to be understood for studying as to how the GDP is growing or contracting in terms of its people. In case GDP per capita is growing with a stable population level, it can potentially be the result of technological progressions that are producing more with the same population level.
It may therefore be difficult to establish that high GDP growth rate of 13.5 percent (as officially announced for first quarter of the current financial year) would possibly affect the GDP per capita unless other variables are checked and maintained under control to ensure the level of prosperity so gauged reaches the last person in queue. Our economy has though stepped up to fifth position in the world economies but on per capita income basis India is ranked 142nd by GDP (Nominal) and 125th by GDP (PPP). Adoption of broad economic liberalization policy enabled Indian to maintain 6-7% growth rate since start of 21st century and from 2013 to 2018 Indian Economy was world’s fastest growing major economy surpassing even China. Statistically, high inflation rate of 7% with 4% population below extreme poverty line, it slipped down from 104th (2019) to 132nd (2022) on Human Development Index and suffers more than 8% (8.28%) rate of unemployment that causes worry amongst professionals and it demands more diligence and professionalism to correct the path of economic development.
There are few indicators suggesting sustainable growth of Indian economy that would support it to achieve better ease of doing business, attain more balanced Export/Import scenario, better technological support required to sustain growth, improve Human Development Index rating, reduction in public debt and attain manageable budget balance so that Indian economy improves on international credit rating of BB+ with Positive Outlook by Standard & Poor’s, Moody’s Baa3 Stable Outlook and BBB stable outlook by Fitch. A consistent professional handling of middle Income developing market economy of India with diligent planning would enable nation to enhance level of prosperity to reestablish her status of world’s fastest growing major economy in the world. This would not only raise the status of India Economy but in turn raise the level of prosperity for people of India especially those who are left below extreme poverty line. Jai Hind, Jai Bharat.