Prosperity levels matter, not GDP size
India’s GDP is becoming bigger than France’s, and closing in on the UK is not a matter of much pride if it continues to sit ‘pretty’ among the low-middle-income countries. In fact, the whole focus on India becoming a $5 trillion or $10 trillion economy is meaningless if the country cannot relatively grow its per capita income levels. India’s per capita GDP, which is an indicator of general income levels in the country, was $2,277 in 2021, as per the World Bank. It is just slightly better than the Republic of Congo ($2214), Angola ($2,137) and Nigeria ($2,085), while countries like the Solomon Islands ($2,337), Ghana ($2,445) and Bangladesh ($2,500) are ahead of it.
Of course, we may tom-tom the size of our GDP, and the fact that it is now bigger than Italy, France and may soon go past the UK and Germany, we are only acknowledging the half-truth. The size of the economy is not the same as prosperity levels. The per capita GDP of France ($43,518) is 20 times, and that of Italy ($35,515) is 17 times that of India. Back home in India, UP is second or third (and it has been in that position for quite a long time) in terms of the size of its GDP but is second in per capita GDP (higher than that of Bihar). Even Jharkhand has a better per capita GDP than UP.
For a country as large as India, with 50% of the population in the 0–25 years age category, it will grow at a relatively higher pace than most other economies. In fact, the GDP growth rate differential between India and any European country could very well be 400–500 basis points or even more for a long time.
The government should, therefore, focus more on increasing the income levels in the country and getting rid of the tag of a low-middle-income country (countries with a per capita GDP of up to $2,582).The target should also be to make India’s growth more inclusive. A country where those earning `25,000 or more constitute the top 10% of the income earners is not doing great justice to a big part of the population.