India’s per capita income doubles since 2014-15, uneven wage distribution remains a challenge

India's per capita income has almost doubled to ₹1.72 lakh since 2014-15 when PM Modi-led government came into power. Economists believe sustaining per capita income between 5% to 6% per annum along with appropriate redistributive policies will support the country's growth ahead. However, they also pointed out that uneven income distribution is likely to be a challenging factor.

According to National Statistics Office (NSO) data, the per capita income in terms of net national income, in current prices, stood at ₹1,72,000 in 2022-23 with a growth rate of 15.8% over the previous year. This would be nearly double ₹86,647 in 2014-15.

Per capita income at the current prices was estimated at ₹1,27,065 and ₹1,48,524 respectively for the years 2020-21 and 2021-22.

This indicates that there has been a consistent rise in per capita income.

Former director of the premier economic research institute NIPFP Pinaki Chakraborty told PTI that as per the World Development Indicator database, the average growth of India's per-capita income in real term for the period from 2014 to 2019 was 5.6% per annum. He added that "this growth is significant. We have seen improvements in outcome related to health, education, and economic and social mobility. Covid impacted us badly. However, we have seen significant economic recovery after Covid."

According to Chakraborty, sustaining per-capita income growth at 5 to 6% per annum with appropriate redistributive policies will help sustain this momentum.

However, economist Jayati Ghosh said, you are looking at GDP in current prices, but if you account for inflation, the increase is much less in the per capita income in nominal terms. The JNU professor stated that the majority of the upside has accrued to the top 10% of the population. But in contrast, median wages are falling, and possibly even lower in real terms ---- and this distribution as per her is critical.

In Q3FY23, India's gross domestic product (GDP) recorded a growth of 4.4% --- lower than the growth of 6.3% in the second quarter.

Post GDP numbers, Radhika Rao, Executive Director and Senior Economist at DBS Bank said, "India’s real GDP growth moderated to 4.4%yoy in Oct-Dec22 (3QFY23) from 6.3% last year, part of which was on base effects and past revisions. FY22 growth was raised by 40bp to 9.1%, besides an increase in absolute numbers (INR terms) for 3QFY22, in essence lifting the comparative base vs FY23. Nonetheless, growth relative to pre-Covid level (3QFY20) was higher by 12% by the Dec 22 quarter."

Further, in its economic review report, JM Financial said, "The second advance estimates peg real GDP growth to remain unchanged (7%) from previous estimates, even after undergoing an upward revision in the base period (9.1% vs 8.7% prior). GDP growth of 4.4% in Q3FY23, slightly missed market estimates (4.6% est.). If not for the NSO’s downward revision in growth rates in Q3FY22 (5.2% vs 5.4% prior), the economic growth in Dec’22 quarter would have been as low as 4.2%. Sharp moderation in consumption dragged the economy, which along with slowing imports is indicating towards slowing domestic demand."

JM Financial expects the economy to grow at 6.8% in FY23 vs NSO’s 7% estimate. RBI’s monetary policy action in the upcoming MPC meet (Apr’23) would be mainly decided by the Feb’23 CPI print, we do not expect MPC to sacrifice growth at this juncture.

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