Importance of Per Capita GDP: Express View on PM’s ‘guarantee’ for Indian economy

Source: The post Per Capita GDP important has been created, based on the article “Express View on PM’s ‘guarantee’ for Indian economy: Goal worth setting” published in “Indian express” on 8th April 2024.

UPSC Syllabus Topic: GS Paper 3-Economy-growth and development

News: The article discusses India’s economic growth under present government. It moved from the world’s 10th largest economy to 5th, but the growth rate was slower than before.

What has been India’s economic growth during the last 10 years?

Over the last 10 years, India’s economy has grown, moving from the 10th to the 5th largest globally.

However, the annual GDP growth rate averaged 5.9% under the present Indian government, slower than the previous 6.8% under the previous Indian government.

Despite this growth, India’s per capita GDP remains low at just over $2,500, compared to China’s $13,000.

Why is Per Capita GDP important?

Measure of Living Standards: Per capita GDP indicates the average income per person, directly relating to the population’s living standards.

Beyond Poverty Elimination: It provides a more comprehensive economic goal than just reducing poverty, focusing on overall improvement in quality of life.

Policy Making Tool: Setting targets for per capita GDP helps policymakers in planning and implementing strategies for sustainable and inclusive economic growth.

Long-term Vision: India’s aim to quadruple its per capita GDP by 2047 is an example of using these targets for long-term economic planning and development.

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What should be done?

Prioritize policies that boost income and quality of life, not just the overall economy size.

Aim for a broader development than just GDP size, ensuring benefits reach all sectors of society.

Address the gap in economic growth compared to countries like China; India’s per capita GDP growth has lagged behind.

Align goals with developed nation status: Strive to reach the ‘high income’ status as defined by the World Bank, moving beyond the current ‘lower-middle income’ classification.

Questions for practice:

Examine India’s economic growth trends over the past decade and the importance of per capita GDP in evaluating its progress and policy priorities.