India’s economic report card is not all good:
Given the huge positive press that India has received in recent times, it is sobering to discover that India’s per capita income is just a shade higher than that of sub-Saharan Africa, and about one-sixth that of Latin America.
Equally surprising is that 35% of India’s population lives on less than $1 a day, which is comparable to Bangladesh’s 36% and much worse than Pakistan’s 17% and Sri Lanka’s 6%.
The common wisdom says that India has the second fastest growth rate in the world:
If we take the national income growth rate over the period 2000-04, with an annual growth rate of 6.2% India was not second but the 17th fastest-growing nation in the world.
If we take a longer period, 1990 to 2004, India moves up to being the fourth fastest-growing economy in the world, behind China, Vietnam and Mozambique.
And if we take an even longer view – from 1980 to now, India does indeed come second, behind China and virtually tying with Vietnam.
So what India has excelled in is sustained growth.
One issue is inequality in India:
Let us consider the ratio of income earned by a country’s richest 10% and the poorest 10%. The ratio for India is 7.3. That is, the richest 10% of the population is a little over seven times as rich as the poorest 10%.
All South Asian nations have similar ratios.
This is a lot of inequality but not as much as in China which has a ratio of 18.4 or the United States 15.7.
OK, so it’s not inequality per se that’s the problem:
The problem with South Asia is that, being poor, even this smaller inequality means much greater hardship for the poor and this is what is feeding various kinds of rebellious movements in the region.