Gross Domestic Product (GDP) and Per Capita Income: India's GDP was USD 2.7 trillion in 2020, making it the world's sixth-largest economy. However, the per capita income in India is only about USD 1,947 per year, which is much lower than the world average of USD 11,570. This means that the overall economic output in India is high, but the benefits are not evenly distributed among the population.

Human Development Index (HDI): HDI is a composite index that measures the overall development of a country based on indicators such as life expectancy, education, and income. According to the United Nations Development Program (UNDP), India's HDI value in 2020 was 0.645, which is below the world average of 0.737.

This indicates that while India has made significant progress in improving human development indicators in recent years, there is still a long way to go.

 Why is India’s Per capita income low compared to the world average? Suggest any one measure to increase the Per capita income of India. 


Answer by student

  • India’s per capita income is low compared to the world average because it has a large population , a high level of income inequality , and rapid population growth .
  • One measure to increase the per capita income of India is to invest more in education, skill development, and infrastructure to improve human capital and economic growth.

Detailed Answer by Teachoo

  • Per capita income  is the average income earned by an individual in a country in a given year. It is calculated by dividing the  national income  by the  total population .

  • India’s per capita income  was USD 1,947 in 2020, which was much lower than the  world average of USD 11,570. This means that India’s overall economic output was high, but the benefits were not evenly distributed among the population.

  • There are several reasons for India’s low per capita income compared to the world average. Some of them are:
    • India has a  large population  of about 1.38 billion people, which reduces the per capita income as the national income has to be divided among more people.

    • India has a high degree of  income inequality , where a small proportion of the population earns a large share of the national income, while a large proportion of the population remains poor or vulnerable. According to the World Inequality Database, the top 10% of the population in India earned about 56% of the national income in 2019, while the bottom 50% earned only about 15%.

    • India has a low  productivity level in many sectors, especially agriculture, which employs about 42% of the workforce but contributes only about 16% to the GDP. Low productivity means that less output is generated per unit of input, which reduces the income level and growth potential.
  • One measure to increase the per capita income of India is to invest more in  education, skill development, and infrastructure  to improve  human capital  and  economic growth . Investing in education can increase the literacy rate, numeracy rate, and enrolment rate of the population, which can enhance their employability and productivity. Investing in skill development can provide vocational training, certification, and apprenticeship opportunities for the youth, especially in emerging sectors such as digital technology, renewable energy, and health care. Investing in infrastructure can improve the quality and availability of roads, railways, ports, airports, power, water, sanitation, and communication facilities, which can reduce the cost and time of doing business and increase the efficiency and competitiveness of the economy.
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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 14 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.