By | Ramesh Ranjan | Advisor at Farsight Technologies
India’s economy is forecast to grow by 7% this year, making it the 5th largest in the world, the International Monetary Fund (IMF) says. India’s GDP is likely to be around 3.5 Trillion dollars.
In 1987, the GDP (Nominal) of China and India was almost equal. Today in 2022 China’s GDP is 18.46 Trillion Dollars. It is 5.5 times that of India.
There has been a lot of pats on the back and boasting of India being the 5th largest economy. But with a 1.4billion population is it something really an achievement.
What is India’s position when measured on the basis of per capita income?
India has GDP per capita of $2,200.
In 2021, India was ranked 145th in a list of 193 countries for which data was available. India was placed above Kenya and below the Solomon Islands. India’s position when it comes to the per capita income adjusted for purchasing power parity? India stood 128th in a list of 193 countries.
One can understand the developed countries:
- But Thailand has a GDP per capita of $7000. They have as many people as TN.
- Malaysia is $ 10,000.
- Even Indonesia which is heavily populated, has a GDP per capita of $ 3800.
- And our neighbour Bangladesh has a Per capita income of $ 2700
These countries aren’t blessed with natural capital or intellectual capital that India is blessed with.
One may say that some of the poorer states are pulling down the national average, but even Maharashtra, Karnataka, Gujarat and TN are around $3000 only.
What does the data imply. The productivity of Indians is very low. The yield per Indian is abysmally low. Imagine if an average Indian were to generate 10,000$ per capita income, India would be around 14Trillion dollar economy.
Lets look at some sectors –
Tourism : Kerala, which is touted as Gods own Country is our best marketed state for tourism has 1.5 billion $ revenues from tourism. Bali, just one island in Indonesia generates 8 billion $ of revenue.
Textile : India is the world’s fifth biggest Textile exporter with a 4 per cent share of the $840 billion global market, while China controls more than a third of it. India’s exports were on a par with closest rival Bangladesh about a decade ago but have lagged in recent years – especially on garments – partly due to higher labour costs that make Indian clothes some 20 per cent costlier. India and Bangladesh are almost neck to neck with around 35Billion $ of exports. India is almost 22time bigger in size when compared to Bangladesh.
And we are no better in other sectors as well viz. IT, Services, Manufacturing etc. Despite India’s claim to be the IT Capital of the world, we are ranked 58th in the Global Finance 2022 Ranking of the World’s Most Technologically Advanced Countries
No wonder that the per capita income of Bangaldesh is almost neck to neck with India.
Why are we in such a situation?
Primarily our individual productivity is very very low. We need to work harder and smarter. We need to crank up the manufacturing sector which is on a slipping slope and fast declining. This leads to high reliance on imports for most machineries. Our fixed costs are very high – land (real estate), building (rentals), utilities, taxes and labour cost is rising on an average 10% every year.
Our currency is not competitive in the world. Its been depreciating stead fast. Due to higher inflation , our cost of capital is high. It makes it difficult to earn the right return on invested capital. Besides we are not efficient and quick as our counter parts. We have longer lead times than for Chinese manufacturers that make India uncompetitive.
At a time when we should be focusing on our economy and how to make the life of a common man better, we are debating on religion, caste, language, what to wear, what to eat, rewriting history etc. Our politicians are a reflection of the society at large and we the people have to take up the responsibility of setting the agenda and driving change in the society.
Money is not everything, what about Happiness?
Nay sayers may argue that money is not everything. We are contended and are happy. But where does India stands in the Global Happiness Index, India is ranked 136th Country out of 146 Countries’in the Global Happiness Index
This leads us to wonder whether India is Rich and Indian’s are Poor! We have a long way to go before we become a developed Country and rest on our laurels.