{"id":40348,"date":"2024-04-04T09:18:34","date_gmt":"2024-04-04T03:48:34","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=40348"},"modified":"2025-04-25T01:39:48","modified_gmt":"2025-04-24T20:09:48","slug":"india-should-target-per-capita-and-not-aggregate-gdp","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/india-should-target-per-capita-and-not-aggregate-gdp\/","title":{"rendered":"India Should Target Per Capita and Not Aggregate GDP"},"content":{"rendered":"<h2><strong>What\u2019s in today\u2019s article?<\/strong><\/h2>\n<ul>\n<li>Why in News?<\/li>\n<li>China\u2019s Growth Story<\/li>\n<li>Where India Stands?<\/li>\n<li>Why India\u2019s Focus Must be on Per Capita?<\/li>\n<\/ul>\n<h2>Why in News?<\/h2>\n<p>At current per capita GDP levels, India is a \u201clower-middle income\u201d ($1,136-4,465 range) country and China is an \u201cupper-middle income\u201d ($4,466-13,845 range) country.<\/p>\n<p>As India will be the world\u2019s third largest economy by 2028 (even with a modest 6% annual GDP growth), it should focus on increasing per capita GDP to $13,000-14,000 levels on the road to Viksit Bharat (developed India) by 2047.<\/p>\n<h2>What\u2019s in Today\u2019s Article?<\/h2>\n<ul>\n<li>China\u2019s Growth Story<\/li>\n<li>Where India Stands?<\/li>\n<li>Why India\u2019s Focus Must be on Per Capita?<\/li>\n<\/ul>\n<h2>China\u2019s Growth Story:<\/h2>\n<figure class=\"image\"><img decoding=\"async\" src=\"https:\/\/vajiram-prod.s3.ap-south-1.amazonaws.com\/relative_growth_of_india_and_china_6828d1fd1c.webp\" alt=\"Relative Growth of India and China\" \/><\/figure>\n<ul>\n<li>After starting at almost similar levels in 1990, China surged ahead of India and the gap widened over time.<\/li>\n<li><strong>In 1990<\/strong>, China\u2019s economy was just over 1.2 times India\u2019s, it became 3.6 times and 5.3 times India\u2019s in 2010 and 2022 respectively.<\/li>\n<li><strong>Since 2010,<\/strong>\u00a0China\u2019s annual growth has eased to an average of\u00a0<strong>7% and to 5.3%<\/strong>\u00a0in the five years ended 2022.<\/li>\n<li>But the sustained double-digit growth of the 1990s and 2000s led to<strong>\u00a0China\u2019s per capita GDP crossing the $10,000 mark by 2019<\/strong>.<\/li>\n<li>At current growth rates, China (with economic size at $18 trillion in 2022) could replace the US ($25.4 trillion GDP in 2022) as the world\u2019s largest economy by the early to mid-2030s.<\/li>\n<\/ul>\n<h2>Where India Stands?<\/h2>\n<ul>\n<li>India has seen its<strong>\u00a0real GDP growth<\/strong>\u00a0in dollar terms fall to an average of 5.9% during 2010-22 and\u00a0<strong>5.7%<\/strong>\u00a0for the nine years from 2014.<\/li>\n<li><strong>While India\u2019s nominal GDP<\/strong>\u00a0(at $3.4 trillion in 2022) is just short of what China\u2019s was in 2007, there is no escaping the fact that India has been\u00a0<strong>a relative growth underperformer<\/strong>.<\/li>\n<li>Even the improvement in its\u00a0<strong>overall GDP ranking from No. 10 to No. 5\u00a0<\/strong>between 2013 and 2022 has come on the back of a not-so-high average annual growth of 5.7%.<\/li>\n<li>To illustrate the point, Japan\u2019s and Germany\u2019s nominal GDP were $4.3 trillion and $4.1 trillion respectively in 2022.<\/li>\n<li>Therefore, India needs to grow at only 6% per year in current dollars (and the other two economies at 2%) to become the world\u2019s No. 3 economy by 2028.<\/li>\n<\/ul>\n<h2>Why India\u2019s Focus Must be on Per Capita?<\/h2>\n<ul>\n<li>Aggregate GDP matters (being the world\u2019s No. 1 or No. 3 economy), primarily because it increases a country&#8217;s geopolitical weight.\n<ul>\n<li><strong>For example,<\/strong>\u00a0Monaco, Liechtenstein and Bermuda may be the top 3 countries by per capita GDP, but that obviously does not make them superpowers.<\/li>\n<\/ul>\n<\/li>\n<li>However,\u00a0<strong>for a country like India<\/strong>\u00a0with its massive population and present levels of development,\u00a0<strong>per capita GDP is as important as aggregate GDP.<\/strong><\/li>\n<li><strong>GDP growth has two basic components:<\/strong>\u00a0population and per capita output. The first is demographic; the second is economic, reflective of the\u00a0<strong>population\u2019s general standard of living<\/strong>.<\/li>\n<li>The Chinese story is extraordinary for &#8211;\n<ul>\n<li>Not just the almost 46-fold expansion in its economy between 1990 and 2022 (against India\u2019s 11-fold),<\/li>\n<li>But also, because it has been accompanied by an increase in per capita GDP from $348 (less than India\u2019s $369) to $12,720 (far more than India\u2019s $2,411) during this period.<\/li>\n<\/ul>\n<\/li>\n<li>As the World Bank\u2019s per capita GNI (gross national income) threshold for categorising a country as \u201chigh income\u201d is $13,846, India must touch this mark to become \u201cViksit Bharat\u201d or developed India by 2047.<\/li>\n<\/ul>\n<hr \/>\n<h2>Q.1. What is the main objective of Viksit Bharat 2047?<\/h2>\n<p>&#8216;Viksit Bharat 2047&#8217; is the current government&#8217;s roadmap to making India a completely developed nation by 2047; 100 years after independence. According to the government of India, the core objective of the Viksit Bharat vision is to foster inclusive economic participation among all citizens.<\/p>\n<h2>Q.2. Why is per capita GDP more important than aggregate GDP?<\/h2>\n<p>GDP per capita is a popular metric used to measure the average prosperity and well-being of a country. Unlike some other measures of economic productivity, it takes populations into account, allowing easy comparisons between countries with different sized populations.<\/p>\n<p><strong>Source:<\/strong> <a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/viksit-bharat-india-gdp-per-capita-china-comparison-economy-growth-9245440\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>On road to Viksit Bharat, India should target per capita, not aggregate, GDP. Here\u2019s why<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>For a country like India with its massive population and present levels of development, per capita GDP is as important as aggregate GDP.<\/p>\n","protected":false},"author":5,"featured_media":40349,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-40348","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/40348","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=40348"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/40348\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/40349"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=40348"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=40348"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=40348"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}