per capita incomeper capita income

Prof Yashvir Tyagi / Lucknow

Per capita income of a country or a region is an important indicator of development.

In fact, a well- known definition of economic development says, “Economic development is a process whereby a country’s real per capita income increases over a long period of time.”

Per capita income also indicates the level of economic prosperity. It reflects upon the standard of living of people residing in a region. Even Human Development Index (HDI) has per capita income as one of the indicators.

Of late, Uttar Pradesh is trying to become a leading economy of India. UP has set an ambitious goal of becoming a $trillion economy by 2027.

However, on a per capita income metric, UP is not in a comfortable position.  For long, the state has been languishing at the second place from the bottom among all the states and union territories.

Only Bihar has the lower per capita income than UP. As per the latest estimates by the National Statistical Office (NSO) and published by the RBI, the per capita income of UP at current prices is Rs 68,810 for the year 2021-22.

The following table gives the per capita income of UP and India in different years: –

From the above table the following points can be inferred: –

  1. The gap between per capita income of India and UP has widened over the years. It was about 50% in 2011-12 but in 2021-22 the per capita income of UP is only 45.87% of India’s per capita income. At the time of independence, the per capita income of India and UP were almost equal.  The widening gap means UP has not kept pace with the growth at all India level.
  2. Comparing the rates of growth of per capita income of India and UP shows that, in general, per capita income of India has grown faster than the per capita income of UP. This is especially true after 2016-17.

The difference between India’s per capita income and UP’s per capita income is brought out more sharply if per capita income is considered at constant prices of 2011-12. This is presented in the following table: –

It can be observed from the above table that: –

  1. Per capita income of UP was 50.43% of India’s per capita income in 20011-12, and it declined to 49.21% in 2016-17 before plummeting to 44.20% in 2021-22.
  2. The rate of growth of UP’s per capita income lagged the rate of growth at all India level. The average annual growth between 2016-17 and 2021-22, excluding the year 2020-2021 (COVID pandemic) was 2% for UP and 5.13% for India.
  3. What appears more alarming is the fact that in 2016-17, the real per capita income of UP was Rs 40,847 but declined to Rs 40,432 in 2021-22. This means that during the last five years, the real per capita income of UP instead of increasing had decreased. Interestingly, the UP government has been claiming that the per capita income of UP doubled in five years although the fact suggest otherwise.

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In the euphoria of raising the size of the economy of UP to a $trillion in the next five years, let it not be forgotten that the goal of all developmental activities is improvement in the standard of living of people and for that sustained increase in the per capita income is a necessary condition.

(The author is Former Head, Department of Economics. Lucknow University (LU).

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