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INTRODUCTION

Gross Domestic Product (GDP) per person is calculated by dividing the GDP for a particular period by its average population for the year, it serves as an informal measure of a nation’s prosperity. Even if a nation has consistent economic growth its GDP per capita will remain low if the population keeps growing faster which leads to lower standards of living of the people. World Bank data says “global per capita GDP grew by an average of 1.88% annually from 1961 to 2017 where the global economy has expanded at an average pace of 3.52% annually while the world’s population increased by an average of 1.61% per annum”. 

Low per capita results in lower standards of living, lower income for people, lower capacity of people to purchase goods and services and slows down the growth rate of GDP of a country.

COUNTRIES WITH HIGHEST AND LOWEST GDP PER CAPITA IN THE WORLD

COUNTRIES WITH HIGHEST PER CAPITA GDP

1.	Qatar	$128,490
2.	Macao SAR	$118,100
3.	Luxembourg	$109,200
4.	Singapore	$98,260
5.	Brunei	$81,610

COUNTRIES WITH LOWEST PER CAPITA GDP

1	Burundi	$730
2	Central African Republic	$730
3	Democratic Republic of the Congo	$870
4	Niger	$990
5	Liberia	$1,160

INDIA’S PER CAPITA COMPARED TO THE WORLD 

Per capita income

Serial no.	Country	Per Capita GDP (US)  (Gross Domestic Product)
1	United Sates	$59,500
2	Japan	$42,800
3	Germany	$50,400
4	France	$43,800
5	United Kingdom	$44,100
7	China	$16,700
6	Brazil	$15,600
8	India	$7,200
9	Pakistan	$5,400
10	Bangladesh	$4,200

ANALYSIS

REASONS FOR INDIA’S LOW PER CAPITA INCOME

Economic growth is the sum of capital such as roads, structures and bridges which depends on savings and in least developed countries (S, Causes of Low Per Capita Output: LDCs, n.d.) (LDC) like India saving is poor, these countries generally borrow from more industrialised nations. Another reason is low capital equipment for workers to work with which results to low productivity and so their output per capita. The physical capital is important for productivity of workers and in India workers are illiterate with no skills which leads to low productivity and old production methods which lacks in capital with poorly informed and trained workers. New technologies which should be introduced in agricultural fields for modern cultivation which can result in higher productivity which would also allow labours to work in industries rather than fields and would generate surplus amount of food. Medical advances have reduced death rate while birth rates remain high and in Least Developed Countries (LDC) most of the population of the country is below poverty line which leads to unemployment. Traditional practices provide employment with almost nil value and instable government policies are useful in short runs during political insurgency and civil wars which are common in Least Developed Countries (LDC) but they slow down long run development of the countries. Price-control policies makes food and services affordable for citizens but difficult for farmers to earn and produce. 

Indian economy is highly dependent on agriculture which is its primary producing, the majority of the share of the national income which is 34% and engages 66% of the population (Sethy, n.d.) of the country, this prevents quick rise in the level of national income and per capita income as agriculture is rather a way of life than commercial basis. India is a 2.6 trillion dollar economy with a growth rate of 7%, according to Economic Survey of India 2018 it has 93% unorganised employment and only 1% that is 15 million people pay income tax. It has the sixth biggest economy in the world and it stands second on population count sharing 17.3% of world population and 3.2% of worlds GDP. Per capita income is total GDP of a country divided by its population which clearly states the major reason behind India’s low per capita income of India. There was a huge part of population in India which did not use banking services which resulted low financial inclusion, Modi government has been successful in resolving this issue.  High dependency on agriculture, low quality infrastructure, health and nutrition problem and backward technology are other factors which add to the reason behind low per capita income India.

HOW CAN THIS ISSUE BE RESOLVED? 

India being a Least Developed Country (LDC) is low on education and with such a huge population there is low rate of education, there are 13,500 villages in India without schools and the literacy rate in India has reached Literacy in India (Literacy in India, 2019). Increase in rate of education and skill development will contribute to the national economic production, increasing the GDP which will increase the per capita income. In India most of the population is below the poverty line and the ones who are above the poverty line does not live a luxurious economic life due to which the people do not or are not able spend much on goods and services, an increase in consumption of goods and services can benefit the GDP which will result in the increase of per capita income which can be done by decreased interest rates by the federal government or other methods like discounts, offers, tax breaks, the export prices in India is averaged to be 211.37 and index points reaching up to 376 in 2018 (Trading Economies, n.d.).Government can increase the GDP by increasing the total exports of the year. Increasing imports will directly impact the income per capita.

 Indian government spends$441 billion on transportation and water infrastructure in 2017 (Congressional Budget Office, 2018) and the Modi government has increased the amount spent on food subsidies from 1.9 trillion rupees to 1.69 trillion rupees (Mayank Bhardwaj, 2019) and Rs 4,31,011 crore (US$60.9 billion) in 2019 (Behra, 2019) on defence forces (Indian Army). An increase in the amount of money spent on India itself be it infrastructure, subsidies, defence will increase the GDP and the per capita income. The government can imply laws like China had implied the ‘One child policy’ or make people aware of the disadvantages of high population rate and the existing over population can be converted into an advantage by making people skilled and put them into jobs. The population should be innovative and generate employment for their fellow citizens rather than probing for jobs and adoption of technology in developing countries will boost the economy by dropping costs of production and encouraging new business, better communication, increase in education and skills, providing better standards of living to the people and the quality of capital.

CONCLUSION

The major issue of India is its population due to which the per capita income is low even after India having one of the largest economies in the world. The first effective step that should be taken by the government is birth control to bring the amount of population in control and then educating and developing the skills of the existing population will increase the productivity of the people which will eventually provide them with income and they will be able to consume goods and services and eventually pay taxes which can be invested by the government into the country or to produce higher amount of goods to be exported, employment and education will provide better standards of living and the GDP and per capita income will increase with the increased employment, reduced or controlled population and better standards of living and education.