Slowest Growth in India's Real Per Capita Income
(Updates 05Mar2023, 05Mar2023, 28Feb2023, 04Dec2022, Update 30Nov2022 with Q2 GDP data for FY 2022-23; and Update 16Sep2022 with Q1 GDP data for FY 2022-23 are available at the end of this article)
Governments are in the habit of making tall claims about economic
progress and pull wool over citizens’ eyes. Day in and day out, we’re bombarded
with useless data about the progress India has been making on all fronts–all
part of a disinformation campaign. The governments will deflect our attention
by not throwing light on what is needed for our progress, but they selectively
highlight what they want the masses to know.
Ultimately, all actions taken and bets not taken are to reflect in
per capita income of the population--but actually the "accomplishments" of the governments are not reflecting in personal incomes. One of the biggest failures
of the PM Modi government in the past eight years is lack of job creation
(others include, disastrous demonetisation or note ban of November 2016, sloppy
rollout of goods and services tax or GST, draconian Corona Virus lockdowns and
so on).
India's real per capita GDP* fell by 7.6 per cent in 2020-21 to Rs
100,032. Mind you, this includes the incomes of the Ambanis, Adanis, Tatas,
Birlas and the like. If you exclude them, I'm sure ours has plunged by more
than 25 per cent!
[* gross domestic product at constant (2011-12) prices adjusted
for inflation]
During 2021-22, the real per capita income rose by 7.6 per cent to Rs
107,670. Interestingly, the per capita income during 2019-20 was Rs 108,247.
So, in the past two years, the per capita income fell by 0.27 per cent which is
unprecedented in India’s history.
Of course, Indian government has got a good excuse in the form of
COVID-19 Pandemic to justify the fall in personal incomes. What is not
highlighted is the fact that the fall in personal incomes is mainly self-inflicted,
that is attributable to the draconian lockdowns imposed by the PM Modi
government in March-June 2020.
Everyday, we’re told tax collections in India are at record highs.
The gullible never understand why tax collections are high when their own
personal incomes are down in the dumps. It’ll take some time for the masses to
figure out tax collections are high due to the simple fact that tax rates
are high; tax extortion is high; every payment and receipt are subject to tax
deduction at source (TDS) and / or tax collected at source (TCS); and high
indirect taxes have been hurting the vulnerable classes more.
India's per capita income is low and prospects for income mobility
are dim. More students have been going abroad for studies as they are unable to
find good opportunities at home. Most jobs are created in the information
technology sector, especially for the educated people–which is also good indirectly
for those in the lower strata of society.
(story continue below)
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Related:
Why is India Falling Behind Bangladesh?
India 2nd quarter GDP FY 2021-22
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The vulnerable classes are forced to depend on jobs created, not
so well-paid, by the e-commerce and other digital sectors of the economy.
Adam Smith
"The wealth of a nation must be measured by its per capita income. Only a commercial society, in which every individual acted in their own self-interest but was driven by competition, would improve everybody’s life for the better," thus said Scottish philosopher and economist Adam Smith more than 250 years back.
It's a big disappointment most of the young are unable to enjoy upward mobility in their careers. Rather, they are staring at the prospect of downward mobility.
The following tables highlight the GDP data of several years:
Table 1: India's Real per capita GDP Annualised Growth
Rate % under PM Modi government:
This is a fun diagram to 'extol' India's accomplishments >
e.g. i) annualised real per capita GDP growth rate for the past eight
years (between 2013-14 and 2021-22) is 4.05%
ii) annualised real per capita GDP growth rate for the past five
years (between 2013-14 and 2021-22) is 2.59%
iii) annualised
real per capita GDP growth rate for the past two years (between 2019-20 and 2021-22) is
negative 0.27
Table 2: India's per capita GDP -- at current prices and constant prices (base year 2011-12) >
Table 3: India's Real GDP Annualised Growth
Rate % under PM Modi government:
This is a fun diagram to 'extol' India's accomplishments >
e.g. i) annualised real GDP growth rate for the past seven
years (between 2014-15 and 2021-22) is 4.92%
ii) annualised real per capita GDP growth rate for the past four
years (between 2017-18 and 2021-22) is 2.90%
iii) annualised
real per capita GDP growth rate for the past two years (between 2019-20 and 2021-22) is just 0.75%
Table 4: India real GDP growth rate (yearly) at constant prices (base year 2011-12) >
Table 5: India real GDP growth rate (quarterly) at constant prices (base year 2011-12) >
Table 6: India GDP growth rates (yearly) at current prices >
Table 7: India GDP growth rates (quarterly) at current prices >
References:
- - -
P.S.: Update on 05Mar2023 with real and nominal Per Capita GDP data from 2011-12 to 2022-23 (2022-23 data are as per advance estimates released on 28Feb2023) >
Real and nominal per capita data numbers are much worse than overall GDP data due to steady population growth rate in India.
Real per capita GDP grew (CAGR) by just 2.1 percent in the past three years (b/w 2022-23 and 2019-20). And the 9-year CAGR for real per capita GDP is just 4.4 percent.
Compare this lacklustre per capita growth of 2.1 percent with price rise in LPG cylinder (14.2 KG used for domestic use). In the past three years, the cost of cylinder used by domestic households rose by an annualised growth rate of 13.2 percent (from around Rs 800 in 2020 to Rs 1,155 now).
This is just one item I compared, readers can compare prices of other essential items -- and can come to their own conclusions.
For 2022-23, real per capita GDP (adjusted for inflation) is Rs 115,490 and nominal per capita GDP is Rs 196,716 -- as per Indian government's latest estimates.
P.S.: Update on 05Mar2023 with real and nominal GDP data from 2011-12 to 2022-23 (2022-23 data are as per advance estimates released on 28Feb2023) > India real GDP growth rates have been anaemic for the past nine years, despite tall talk.
Why do I say anaemic growth rates? You check the data of compounded annualised growth rates (CAGR) from now (FY 2022-23) to past three to 11 years.
For example, the past three years CAGR of real GDP between FY 2022-23 & 2019-20 is just 3.2 percent (of course, it was due to slump in GDP caused by draconian COVID-19 lockdowns in 2020-21).
Or, you take 5-year CAGR (b/w 2022-23 & 2017-18) of real GDP, which is just 4.0 percent. Even 9-year CAGR (b/w 2022-23 & 2014-15) is just 5.6 percent (which is a poor reflection on the PM Modi government which has been in power continuously since 2013-14).
P.S.: Update on 28Feb2023 with Q3 GDP data for FY 2022-23 > Nominal GDP and Real GDP growth rates > (this MOSPI press note is important because it contains more than 10 years of data for real as well as nominal GDP numbers)
Drastic slowdown in India's real GDP growth rate: in first half of FY 2022-23, India's real GDP grew by 9.57 percent; and in second half of FY 2022-23, real GDP is estimated to show a tepid growth of just 4.76 percent.
India's real GDP (at constant prices 2011-12) for FY 2022-23 is expected to grow by 7 percent to Rs 159.71 lakh crore compared to FY 2021-22; and the third quarter GDP grew by 5.1 percent compared to 3rd quarter of previous year.
India's nominal GDP for FY 2022-23 is expected to grow by 15.9 percent vs previous financial year; and the third quarter GDP at current prices grew by 9.9 percent. Table 1 and 2 >
P.S.: Update on 05Dec2022 > GDP deflator > difference between real and nominal GDP numbers between Jul-Sep2019 and Jul-Sep2022 quarters > it turns out cumulative inflation as measured by the GDP deflator is a whopping 26.7 percent (real GDP grew by 7.6% vs nominal GDP growth of 34.3% -- see below image) >
Instead of one quarter numbers, I've compared the real and nominal GDP numbers for the trailing 12-month figures as at the end of Sep2019 and Sep2022 > it
turns out cumulative inflation as measured by the GDP deflator is 25.5 percent (real GDP grew by 7.7% vs nominal GDP growth of
33.2% -- see below image), only slight difference between the quarterly and 12-month numbers >
P.S.: Update on 30Nov2022 with Q2 GDP data for FY 2022-23 > Nominal GDP and Real GDP growth rates >
P.S.: Update on 16Sep2022 with Q1 GDP data for FY 2022-23 >
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Disclosure: I've vested interested
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any.
Disclaimer: The analysis and
opinion provided here are only for information purposes and should not be construed
as investment advice. Investors should consult their own financial advisers
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