@DeveshBalkote

India's GDP per

capita:
Why is it so low?
Swipe know why
 PAGE 1

India is one of the fastest growing economies in

the world, but its GDP per capita is still very low
compared to other countries.
According to the World Bank, India’s GDP per
capita (current US$) was $1,910 in 20201,
ranking 142nd in the world.
What are the reasons behind this gap? Let’s
explore some of the factors that affect India’s
economic performance and potential.
PAGE 2

Low
Productivity And Competitiveness
Productivity measures how efficiently inputs such as
labor and capital are used to produce outputs such as
goods and services. Competitiveness measures how
well a country can sell its products in the global market.
India lags behind many countries in both aspects, due
to factors such as poor infrastructure, rigid labor laws,
corruption, red tape, skill shortages, and lack of
innovation. According to the World Economic Forum,
India ranked 68th out of 141 countries in the Global
Competitiveness Index 2019.
 PAGE 3

High
High population and inequality
India has the second largest population in the world,
with about 1.38 billion people in 2020. This means that
the GDP has to be divided among more people,
resulting in a lower per capita income. Moreover, India
has a high degree of inequality, with a large gap
between the rich and the poor. According to the World
Bank, India’s Gini coefficient, a measure of income
inequality, was 35.7 in 2011, higher than the world
average of 32.5. This means that a large share of the
income goes to a small group of people, leaving many
others in poverty
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Low
Human development and social
indicators
Human development measures how well a country
provides its people with basic capabilities such as health,
education, and living standards. Social indicators
measure how well a country performs in areas such as
gender equality, environmental sustainability, and social
cohesion. India performs poorly in both aspects, due to
factors such as low public spending, poor quality of
services, social discrimination, and cultural norms.
According to the United Nations Development
Programme, India ranked 131st out of 189 countries in
the Human Development Index 2020.
PAGE 5

But there is hope!

 PAGE 6

GDP per capita based on PPP

GDP per capita based on purchasing power
parity (PPP) is a more accurate measure of the
standard of living in a country than GDP per
capita at market exchange rates. This is because
PPP takes into account the cost of living in
different countries.
 PAGE 7

Future projection
The IMF projects that India's GDP per
capita based on PPP will reach $10,370 in
2028. This is a significant increase from
the current level, but it is still lower than
the GDP per capita of many developed
countries.
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What can we do to help?

Invest in India
Support businesses
Advocate for good governance
 PAGE 9

Moreover, India has a bright future ahead,

as it is expected to grow faster than many
other countries in the coming years.
According to Bloomberg Economics,
India’s GDP will grow from $2.7 trillion in
2019 to $8.4 trillion by 2030, making it
the third largest economy by then. Its GDP
per capita will rise from $2,000 in 2019 to
around $5,700 in 2030, making it an
upper-middle-income economy by then.
PAGE 10

What do you think?

Do you have any other ideas on how to
help India achieve higher GDP per
capita?
What are your thoughts on the
reasons for India's low GDP per capita?
 @DeveshBalkote

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