GOAL WORTH SETTING

World No 3 sounds good. But what matters is not aggregate size of economy as much as population’s general standard of living

IN 2013-14, the year before the Narendra Modi government came to power, India was the world’s 10th largest economy. At the end of its second term, the country’s ranking has improved to fifth, behind the US, China, Japan and Germany. The Prime Minister has “guaranteed” it would further go up to third, should he get a third term. A closer scrutiny, however, shows that the progress from No 10 to No 5 came on the back of an average annual GDP growth of 5.9 per cent between 2014-15 and 202324, below even the 6.8 per cent during the 10 years of the previous Congress-led dispensation. Given India’s present GDP of about $3.5 trillion (as against Germany’s $4.4 trillion and Japan’s $4.2 trillion), it needs to grow by hardly 6 per cent annually (and the latter two at their current sub-2 per cent rates) for emerging as the world’s No 3 by 2028.

Becoming the world’s No 3 sounds good; it adds to the country’s geopolitical heft and ability to exert influence at a global scale. But from a developmental perspective, what matters really is not the aggregate size of the economy as much as its population's general standard of living. That, in turn, is reflected by the per capita GDP. At just over $2,500, it's way below China's $13,000. Considering that, in 1990, India's per capita GDP of $369 was actually higher than China's $348, it only shows how much distance the latter has traveled over the last three decades. If the current and the coming two decades are to be India's decades, the least it must do is target a quadrupling of the per capita gdp to $10,000 in today' s prices. this is consistent with the Modi government's own vision of a Viksit Bharat or “developed India” by 2047. Going by the World Bank's definition, India is now a “lower-middle income” and China an “upper-middle income” country, with the threshold for “high income” — roughly corresponding to “developed” — at $13,845. China is, in fact, almost there.

Quadrupling an average Indian's income in real terms by 2047 is an aspirational target most would more easily relate to, than a $30-trillion GDP. When Prime Minister Modi, in February 2016, gave a call for “doubling farmers' income by 2022”, it led to more focused policy-making from all concerned departments towards achieving the stated goal. A similar target, to raise the standard of living of ordinary Indians, would be worth aiming for — more so when evidence points to headline poverty rates under successive governments coming down significantly. Per capita GDP targets, both near and far term, would be good gauges for policymakers seeking to move beyond eliminating poverty.