The Myth of Affluence in India

 The GDP of India at current prices in the year 2012-13 was Rs 101.13 lakh crores while the per capita GDP was Rs 70,983. The growth in the past decade resulted in the GDP at current prices, without factoring in inflation, rising to Rs 272.41 lakh crores in the year 2022-23 and the per capita GDP rising to Rs 1.72 lakhs. This means a compound annual growth rate over the past decade of 5.5% for the overall GDP. Since the average annual consumer price inflation was also about the same it means that at constant prices there has not been any growth in GDP despite the claim of average annual 6% GDP growth being made by various agencies.

What is of greater concern is that the compound annual growth rate over the past decade of per capita GDP at current prices is only 3.5% which means that the growth in overall GDP is accompanied by a substantial rise in inequality. Moreover, if the average annual CPI inflation is taken into account it means that at constant prices the per capita GDP has declined by 2% annually.
Thus, instead of chest thumping about India soon becoming the third largest economy in overall GDP terms, which will mainly be due to its high population and not because of actual increase in per capita incomes which are abysmally low for most people in this country, we have to buckle down and provide socio-economically equitable and ecologically sustainable livelihoods to the vast majority of the poor.
To add insult to injury today Goldman Sachs has released a report saying that there are 60 million affluent people in India with an annual income of US$10000 or roughly Rs 8 lakhs or more and that it is they who will drive the economy and the rest of the population can lump it. Even this is a gross over estimate which has been reached by them based on the data that there are 114 million demat accounts as if having a demat account automatically means that there are a high amount of stocks in them!! On the other hand according to data released by the Income Tax Department for the year 2021-22, the number of tax filers with income over Rs 5 lakhs who actually paid income tax was only 22 million even though the total number of return filers was 74 million. Poverty and Hunger beset the vast majority of people in this country and it is towards improving their livelihoods that we should be looking instead of relying on the conspicuous consumption of the miniscule few rich people.

5 charts from Goldman Sachs that capture rapid rise of 'Affluent India'

moneycontrol.com • 2 min read