Income in India
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Income in India discusses the financial state in India. With rising economic growth and prosperity, India’s income is also rising rapidly. As an overview, India's per capita ''net national income'' or NNI was around 135 thousand
rupees Rupee is the common name for the currencies of India, Mauritius, Nepal, Pakistan, Seychelles, and Sri Lanka, and of former currencies of Afghanistan, Bahrain, Kuwait, Oman, the United Arab Emirates (as the Gulf rupee), British East Africa, B ...
in 2020. The
per-capita income The median income is the income amount that divides a population into two equal groups, half having an income above that amount, and half having an income below that amount. It may differ from the mean (or average) income. Both of these are ways of ...
is a crude indicator of the prosperity of a country. In contrast, the ''
gross national income The gross national income (GNI), previously known as gross national product (GNP), is the total domestic and foreign output claimed by residents of a country, consisting of gross domestic product (GDP), plus factor incomes earned by foreign ...
'' at constant prices stood at over 128 trillion rupees. The same year, GNI growth rate at constant prices was around 6.6 percent. While GNI and NNI are both indicators for a country's economic performance and welfare, the GNI is related to the GDP or the
Gross Domestic Product Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...
plus the net receipts from abroad, including wages and salaries, property income, net taxes and subsidies receivable from abroad. On the other hand, the NNI of a country is equal to its GNI net of depreciation.


Financial year data

India's nominal
per capita income Per capita income (PCI) or total income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area's total income by its total population. Per capita i ...
was US$1,670 per year in 2016, ranked 112th out of 164 countries by the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
, while its per capita income on
purchasing power parity Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of ...
(PPP) basis was US$5,350, and ranked 106th. Other estimates for per capita gross national income and gross domestic product vary by source. For example, India's average GDP per capita on PPP basis in 2009, according to
The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...
, was US$5,138, with significant variation among its states and union territories.
Goa Goa () is a state on the southwestern coast of India within the Konkan region, geographically separated from the Deccan highlands by the Western Ghats. It is located between the Indian states of Maharashtra to the north and Karnataka to the ...
had the highest per capita PPP GDP at US$14,903, while
Bihar Bihar (; ) is a state in eastern India. It is the 2nd largest state by population in 2019, 12th largest by area of , and 14th largest by GDP in 2021. Bihar borders Uttar Pradesh to its west, Nepal to the north, the northern part of West Be ...
the lowest with per capita PPP GDP of US$682 as of 2015 In rupee terms, India's per capita income grew by 10.4% to reach Rs.74,920 in 2013-14. While India's per capita incomes were low, the average household size and consequent household incomes were higher. India had a total of 247 million households in 2011, with an average of about 4.9 people per household, according to Census of India. Estimates for average household income and the size of India's middle income households vary by source. Using World Bank's definition of middle income families to be those with per capita income between $10 to $50 per day, the National Council of Applied Economic Research of India completed a survey and concluded there were 153 million people who belonged to middle income group in 2006. In contrast, Meyer and Birdsall and Tim Light used a different survey and estimated the number of Middle-Income population to be about 70 million in 2009-2010. These groups, as well as the World Bank, estimated in their 2011 reports that if India's economy continues to grow per projections, India's middle income group would double by 2015 over 2010 levels, and grow by an additional 500 million people by 2025. This would make it, with China, the world's largest middle income market. Compared to other countries,
income inequality There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
in India is relatively small as measured by Gini coefficient. India had a Gini coefficient of 32.5 in the year 1999- 2000; India's nominal Gini index rose to 36.8 in 2005, while real Gini after tax remained nearly flat at 32.6. The states of India have significant disparities in their average income.
Bihar Bihar (; ) is a state in eastern India. It is the 2nd largest state by population in 2019, 12th largest by area of , and 14th largest by GDP in 2021. Bihar borders Uttar Pradesh to its west, Nepal to the north, the northern part of West Be ...
was by far the poorest in India, and per capita income was low in its neighbouring states, along with Uttar Pradesh, Jharkhand, Jammu & Kashmir, Assam, Manipur, and Nagaland.Comparing Indian states and territories
CEIC,
The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...
, (June 2011).
The higher income states include
Goa Goa () is a state on the southwestern coast of India within the Konkan region, geographically separated from the Deccan highlands by the Western Ghats. It is located between the Indian states of Maharashtra to the north and Karnataka to the ...
,
Delhi Delhi, officially the National Capital Territory (NCT) of Delhi, is a city and a union territory of India containing New Delhi, the capital of India. Straddling the Yamuna river, primarily its western or right bank, Delhi shares borders w ...
,
Haryana Haryana (; ) is an Indian state located in the northern part of the country. It was carved out of the former state of East Punjab on 1 Nov 1966 on a linguistic basis. It is ranked 21st in terms of area, with less than 1.4% () of India's land ar ...
,
Sikkim Sikkim (; ) is a state in Northeastern India. It borders the Tibet Autonomous Region of China in the north and northeast, Bhutan in the east, Province No. 1 of Nepal in the west and West Bengal in the south. Sikkim is also close to the Siligur ...
,
Telangana Telangana (; , ) is a States and union territories of India, state in India situated on the south-central stretch of the Indian subcontinent, Indian peninsula on the high Deccan Plateau. It is the List of states and union territories of India b ...
,
Maharashtra Maharashtra (; , abbr. MH or Maha) is a states and union territories of India, state in the western India, western peninsular region of India occupying a substantial portion of the Deccan Plateau. Maharashtra is the List of states and union te ...
,
Tamil Nadu Tamil Nadu (; , TN) is a States and union territories of India, state in southern India. It is the List of states and union territories of India by area, tenth largest Indian state by area and the List of states and union territories of India ...
,
Gujarat Gujarat (, ) is a state along the western coast of India. Its coastline of about is the longest in the country, most of which lies on the Kathiawar peninsula. Gujarat is the fifth-largest Indian state by area, covering some ; and the ninth ...
,
Himachal Pradesh Himachal Pradesh (; ; "Snow-laden Mountain Province") is a state in the northern part of India. Situated in the Western Himalayas, it is one of the thirteen mountain states and is characterized by an extreme landscape featuring several peaks ...
,
Punjab Punjab (; Punjabi: پنجاب ; ਪੰਜਾਬ ; ; also romanised as ''Panjāb'' or ''Panj-Āb'') is a geopolitical, cultural, and historical region in South Asia, specifically in the northern part of the Indian subcontinent, comprising ...
,
Uttarakhand Uttarakhand ( , or ; , ), also known as Uttaranchal ( ; the official name until 2007), is a state in the northern part of India. It is often referred to as the "Devbhumi" (literally 'Land of the Gods') due to its religious significance and ...
, and
Kerala Kerala ( ; ) is a state on the Malabar Coast of India. It was formed on 1 November 1956, following the passage of the States Reorganisation Act, by combining Malayalam-speaking regions of the erstwhile regions of Cochin, Malabar, South ...
.


Rural-urban gap

As in other countries, residents of Indian cities have a higher per capita income and standard of living than rural residents. Towns and cities make more than two-thirds of the Indian GDP, even though less than a third of the population live in them. India has a high rate of migration from rural areas to urban areas. A major reason for migration to cities was the
Partition of India The Partition of British India in 1947 was the Partition (politics), change of political borders and the division of other assets that accompanied the dissolution of the British Raj in South Asia and the creation of two independent dominions: ...
. More than half of the refugees from Pakistan settled in urban areas such as
Delhi Delhi, officially the National Capital Territory (NCT) of Delhi, is a city and a union territory of India containing New Delhi, the capital of India. Straddling the Yamuna river, primarily its western or right bank, Delhi shares borders w ...
. It is estimated that up to 590 million people, or 40% of the Indian population will be living in cities by 2030, much higher than the current 28%. It is also estimated that eight states, including
West Bengal West Bengal (, Bengali: ''Poshchim Bongo'', , abbr. WB) is a state in the eastern portion of India. It is situated along the Bay of Bengal, along with a population of over 91 million inhabitants within an area of . West Bengal is the fourt ...
,
Tamil Nadu Tamil Nadu (; , TN) is a States and union territories of India, state in southern India. It is the List of states and union territories of India by area, tenth largest Indian state by area and the List of states and union territories of India ...
,
Gujarat Gujarat (, ) is a state along the western coast of India. Its coastline of about is the longest in the country, most of which lies on the Kathiawar peninsula. Gujarat is the fifth-largest Indian state by area, covering some ; and the ninth ...
,
Maharashtra Maharashtra (; , abbr. MH or Maha) is a states and union territories of India, state in the western India, western peninsular region of India occupying a substantial portion of the Deccan Plateau. Maharashtra is the List of states and union te ...
,
Karnataka Karnataka (; ISO: , , also known as Karunāḍu) is a state in the southwestern region of India. It was formed on 1 November 1956, with the passage of the States Reorganisation Act. Originally known as Mysore State , it was renamed ''Karnat ...
,
Kerala Kerala ( ; ) is a state on the Malabar Coast of India. It was formed on 1 November 1956, following the passage of the States Reorganisation Act, by combining Malayalam-speaking regions of the erstwhile regions of Cochin, Malabar, South ...
,
Telangana Telangana (; , ) is a States and union territories of India, state in India situated on the south-central stretch of the Indian subcontinent, Indian peninsula on the high Deccan Plateau. It is the List of states and union territories of India b ...
, and
Punjab Punjab (; Punjabi: پنجاب ; ਪੰਜਾਬ ; ; also romanised as ''Panjāb'' or ''Panj-Āb'') is a geopolitical, cultural, and historical region in South Asia, specifically in the northern part of the Indian subcontinent, comprising ...
will have more than half of their total population living in Urban areas by 2030. In India, urban areas have seen a much higher growth rate as compared to rural areas. Despite up to three-fourths of the population living in rural areas, rural areas contribute to only one-third of the national income. The main reason for rural India's poor performance in terms of income is the fact that rural India is mostly dependent on agriculture. The agriculture sector in India grew at a rate of only 1.6% in 2008-09, while the
Indian Economy The economy of India has transitioned from a mixed planned economy to a mixed middle-income developing social market economy with notable state participation in strategic sectors. * * * * It is the world's fifth-largest economy by nomin ...
grew at a rate of 6.7%, despite the
financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...
. An extremely slow rate of growth in the agriculture sector of the Indian economy has serious implications for the rural-urban divide, both in terms of income and GDP. Some estimates say that the average income of a person living in an urban area may be up to 4 times higher than that of a person living in a rural area. The rising levels of
urbanisation in India Urbanization in India began to accelerate after independence, due to the country's adoption of a mixed economy, which gave rise to the development of the private sector. The population residing in urban areas in India, according to the 1901 cen ...
is a major reason for the rising levels of income disparity in the country.


Bridging the Urban-Rural Gap

In India, the government has taken steps to bridge the urban-rural gap. This includes setting up the Council for Advancement of People's Action and Rural Technology (CAPART) by the Ministry of Rural Development. CAPART helps in providing assistance to various organisations which help in developmental activities. There is a constantly widening rift between rural and urban India, not only in terms of income but other social measures. There is an urgent need to strengthen the agriculture sector in India, bring about reforms in labour laws, and provide education. The ''Economic Survey of India 2007'' by
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
concluded that: The analysis of this report suggests that the differences in economic performance across states are associated with the extent to which states have introduced market-oriented reforms. Thus, further reforms on these lines, complemented with measures to improve infrastructure, education and basic services, would increase the potential for growth outside of agriculture and thus boost better-paid employment, which is a key to sharing the fruits of growth and lowering poverty.


Statistics


See also

*
List of Indian states and union territories by GDP per capita This is a list of Indian states and union territories by NSDP per capita. Net state domestic product (NSDP) is the state counterpart to a country's Net domestic product (NDP), which equals the gross domestic product (GDP) minus depreciation on ...
*
States of India by size of economy These are lists of Indian states and union territories by their nominal gross state domestic product (GSDP). GSDP is the sum of all value added by industries within each state or union territory and serves as a counterpart to the national gr ...
*
Poverty in India India is a developing nation. Although its economy is growing, poverty is still a major challenge. However, poverty is on the decline in India. According to an International Monetary Fund paper, extreme poverty, defined by the World Bank a ...


References


External links


Per Capita Net State Domestic Product – State-Wise (At Current Prices)


{{Income of the world