Vikshit Bharat and Per Capita Income

There is a lot of hope among businessmen and stock market participants that a third term led by Narendra Modi will transform India into Viksit Bharat (developed India). The question is how we will measure such a transformation.

The popular indicators are growth in gross domestic product (GDP), tax revenues, stock-market indices, growth in corporate profits, investment flows, and so on. An improvement in these points towards increasing prosperity for the vocal, urban and prosperous minority. They dominate the chatter, so one automatically assumes these indicators will change India into a prosperous country. But will they?

Over the past several years, all these markers have been extremely positive. But have they delivered rapidly rising per capita income, which is one of the most important sings of overall prosperity?

It pays to remember that India’s per capita income or net national income rose from `72,805 in 2014-15 to `98,374 in 2022-23, at just a 3.83 per cent compound annual growth rate, according to the government’s own data. Since the impact of actual inflation is underestimated, the rise in per capita income would be even lower. The living conditions of the average population encompassing education, health, public transport, pollution, the justice system, etc. have not improved. In fact, these indicators have deteriorated.

To charge up economic growth after seven years of slow improvement, the Modi government has spent and will continue to spend `11 trillion every year – on railways, roads, urban transport, water works, energy transformation, defence production, etc – which would create millions of jobs. This will no doubt create a corporate and stock market boom, but it should also have led to job growth. It hasn’t, or not enough to make much of a difference.

In a report in 2023, Knight Frank, a real estate consultancy, had forecast that India’s booming housing market in its top eight cities would propel the construction sector to contribute about one-fifth to the economy by 2030, employing 100 million workers. Real Estate index is up 200 per cent over the past two years. How much of this prosperity has trickled down?

People are suffering acutely due to unemployment, income inequality, and inflation. Unless the government addresses these issues, protests – with or without political leadership – would erupt.

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