[pqr]

India: Rags or Riches?



India happens to be the fifth-largest economy globally.



However, due to its huge population, India's GDP per capita is pretty low compared to other rich nations.



India's GDP per capita ranking is #132, which places India in the territory of smaller Asian and African economies.

Perspective


Data source: Tradingeconomics

To put things in perspective, India’s population size is similar to that of China or all of Africa combined. However, in terms of GDP per capita, India is closer to Africa than China.

India China's contrasting economic growth story

Till 1990, India’s GDP per capita was slightly higher than China.



After that, economic reform in China was fast paced, and that has widened the gap.



China's fast growth in the past was driven by infrastructure investment to build factories, housing, and roads and huge export-led manufacturing sector.

Economic growth and automotive industry



Economic growth has resulted in high growth in the passenger vehicle market in China, which is nearly six times that of India.



Luxury car sales in China just boomed in the last decade, whereas they remained stagnant in India with a low base ever since 2015.



The high consumption of luxury cars in China indicates that wealth distribution is more uniform and prosperity is not superficial.


Source: Public statement

Global luxury car manufacturers now get the majority of their sales from the China region, while India is mostly in the background.

2022 - Richest Indians vs Chinese


Source: Forbes

Not every Indian is poor. According to Forbes magazine, the wealth of the top 100 super-rich Indians in 2022 was nearly $ 800 billion. In comparison, the top 100 richest Chinese have a combined fortune of $ 907 billion.


Source: Forbes/Tradingeconomics

The wealth of the top 100 super-rich Indians in 2022 was equal to 25% of India's GDP. In comparison, the wealth of the top 100 richest Chinese represented only 5% of their total GDP. What it shows is that the wealth distribution is skewed in India, and wealth is getting accumulated in the hands of a few.


Source: Forbes

Wealth distribution is also highly skewed among super-rich Indians, with the top two families accounting for 30% of the top 100's wealth and the top ten families accounting for 48%. Moreover, most of this wealth comes from traditional businesses owned by families for decades, so the average age is also on the higher side.

In contrast, wealth distribution in China is more uniform, the average age is lower, and wealth is generated by new-age businesses, as several traditional businesses have strongholds of state-run enterprises in China.

Due to the high level of wealth distribution inequality, rich Indians also figure in the global top ten list, but the richest Chinese don’t!

Forbes Richest Indian list 2022 (Rank #1- #50)


Source: Forbes

Forbes Richest Indian list 2022 (Rank #51- #100)


Source: Forbes

Forbes richest Chinese list 2022 (Rank #1- #50)


Source: Forbes

Forbes richest Chinese list 2022 (Rank #51- #100)


Source: Forbes

Way forward

The Indian economy needs a new growth engine for rapid GDP growth and wealth creation for the masses. The benefits of growth and prosperity also need to reach many, so India also needs a mechanism for just and uniform wealth distribution. If not, inequality will rise, and most Indians will not have a good quality of life even in the future.

[mygodbole]

MODS: please remove if not relevant

Rags capable of riches, cucumber/banana. Stats are relevant in today's world, so thank you for the breakdown.

1) China has a mono-party system, where all resources can be channelled into specific directions; India kept changing 'ruling party' every now and then, both at state and national level, right up to the end of the 20th century. I think we are looking at a comparison between 65 years of 'my-way-or-highway' vs 'Teri-dhoti-meri-dhoti-se-safed-kaise?' scenario.

Can we include, in this number crunch, all those from the Indian diaspora that hold Indian passports but earn elsewhere, pay taxes elsewhere, prosper elsewhere but hang on to their India citizenship? Both the 'no-choice' migrants to the Gulf and the 'if-possible' migrants to developed/other economies?

1a) Developed economies are just waking up to the fact that most migrating Chinese have relevant 'permissions' from the party back home. Indians have no such stigma as of now, at least.

2) A visitor from India to the Gulf told me some years ago that there is prosperity and security in the Gulf. He added that while India is more prosperous, there is zero security. In a China context, a yuan saved is not just a yuan earned, but a yuan for a rainy day. Saved and secured for the future. In India, saving is part of life, but neither sure nor secure, simply because inflation just runs away with the value of these savings in India.

Possible to factor that into the relevant stats? Just curious.

3) India's DNA has a 'rebellion' gene; we just want to 'rebel' and 'go against' (anyone, on any issue). Every social, religious, regional, linguistic, cultural (and other) groupings have a 'dissident' faction. Mythology, as told to me, states that if 'all senses come together, one can rule the world'. My experiences tell me previous statement is irrelevant. One look at Pune traffic is enough.

We are a nation of law-fearing citizens, not law-abiding nationals. If we can get away with it, why not? Also, 'rules apply to others and not me'.

-----------------

The statistics above give a picture of the previous few years.

What is relevant today is what comes next.

One pertinent fact is that both Europe and China are facing an increasingly ageing population. Fewer tax-payers, more beneficiaries for the taxed-currency. India currently has a 'youth dividend' that it still has to monetise.

I believe these statistics narrate a history from which we can learn.

The pertinent question is: will we? As a nation? As a people?

We are so adept at divide and rule that if we, collectively and individually, can overcome our own DNA, we can not only progress, we can actually prosper.

(Forgot to add the anecdote about Indian crabs in a crate = those who know it, smile; those not aware, please ask on the forum)

[freakmuzik]

I'm no expert but as a layman who has been trying to understand the economy and political side a bit, I feel the truly democratic nature of India vs authoritarian nature of China itself plays a big role.

In India, most things happen in some fairness compared to China. Plus, handling the extreme diversity of this land with the requirements of State Governments and local bodies is another big thing. The fact I appreciate is how in spite of all this, India is growing at a steady pace. China has started to face the ill effects of all its very own doings I believe where as India is just starting to enjoy the presents of its patience and inclusive approach overall.

Thanks for sharing the stats and comparisons. Very insightful.

[extreme_torque]

Originally Posted by freakmuzik

I'm no expert but as a layman who has been trying to understand the economy and political side a bit, I feel the truly democratic nature of India vs authoritarian nature of China itself plays a big role.

Lets put it this way - India is authoritarian democratic country in which the authority changes every 5 years but has advantages of neither. I also feel we have not been improving our democracy in any meaningful way - we still have first past the post voting system which in itself is flawed, we have no democracy in our daily lives including our families, we do not have appreciation for law, judiciary and policing without which there is no democracy, our institutions have been loosing teeth every successive government. I think as a nation we need to commit to an idea and work towards it.

Came across this article some time back which argues how west is wrong about China, its a good read --> https://hbr.org/2021/05/what-the-wes...ng-about-china

[hserus]

Originally Posted by extreme_torque

Lets put it this way - India is authoritarian democratic country in which the authority changes every 5 years but has advantages of neither.

100% agreed

Waving around high GDP is useless given the extremely low per capita GDP which is what matters in practice. And when you normalise for some multi billionaires versus the crores of poor, it becomes an even worse figure than what these statistics say.

[roy_libran]

Apologies to the OP, but it is superfluous to discuss this at this town-square!

None of the members here live below or even around the 2300$ mark, so our perspective, including mine, is skewed by the soaring clouds on which we float.

Reminded me of this scene from Yes Minister (on Women's rights) -

LINK

[GTO]

Mod Note: Just a reminder of our forum rules and to avoid any discussions on politics / politicians. Thanks for the support & understanding

[PreludeSH]

Would be happy with even these numbers if only the gap between rich and poor was not so everest sized

Wouldn't PPP be the right measure than using GDP ? We are not that integrated with the global economy (which is in one way protecting us in the current climate). So using dollars to calculate itself leaves a lot of gaps. Not that this will improve the state of 50% of population who are less prosperous that the top 1%

[freakmuzik]

Originally Posted by extreme_torque

Lets put it this way - India is authoritarian democratic country in which the authority changes every 5 years but has advantages of neither. I also feel we have not been improving our democracy in any meaningful way - we still have first past the post voting system which in itself is flawed, we have no democracy in our daily lives including our families, we do not have appreciation for law, judiciary and policing without which there is no democracy, our institutions have been loosing teeth every successive government. I think as a nation we need to commit to an idea and work towards it.

Came across this article some time back which argues how west is wrong about China, its a good read --> https://hbr.org/2021/05/what-the-wes...ng-about-china

Thanks for sharing these thoughts and I completely agree we have not been improving our democracy in a great way. With our country's diversity though and 'pleasing all' nature, I just feel the growth is going to be very very slow.

But I think I shared a similar thought about china as is said in the article. To quote one highlighted text - "Many Chinese believe that the country’s recent economic achievements have actually come about because of, not despite, China’s authoritarian form of government." Still, I'm unsure about this form of government in a long-term, global POV.

To me, it still feels like a comparison between a garden with weeds and letting many of the plants grow wild and its own way versus a very symmetrically, beautifully arranged garden when i think of India vs China. I don't know what is good and what is bad, but somewhere personally I appreciate the degree of individual freedom.

Sharing another abstract from a world bank article: https://elibrary.worldbank.org/doi/1...20and%20to%20a

"China presents as a country where high GDP growth is driven by the scale of expansion of economic freedom, rather than its final level (which is still low). While economic reforms might explain some of the differences, China outpaced India because (1) the economy was privatized faster; (2) prices were released faster; (3) the labor market underwent much deeper reforms; (4) the economy was opened up to international trade and foreign direct investment (FDI) faster and to a greater extent; and (5) the state’s fiscal position was drastically limited, and fiscal competition among China’s provinces was introduced."

[gnome]

Originally Posted by pqr

India: Rags or Riches?

India happens to be the fifth-largest economy globally.

However, due to its huge population, India's GDP per capita is pretty low compared to other rich nations.

This way of framing is disingenuous, let's be honest - "Inspite of being world's most populous nation, India is fifth-largest economy. It's GDP per-capita is the lowest amongst major countries, ranking 140...."

[alpha1]

Another statistics that needs to be observed (couldn't see if any correlation has been made in the above posts):
Correlation between richest people in the Forbes list and their respective promoted firms in the Forbes list.

India will have far larger number of individual people who are rich, but a dissapointing number of their firms who are on the similar global arena. Ultimately it is the firm that does value addition, generates employment, and improves living conditions, not individual rich man's wealth.

[gnome]

Originally Posted by extreme_torque

Lets put it this way - India is authoritarian democratic country in which the authority changes every 5 years but has advantages of neither.

Agree. India became a democratic republic by accident, not through people's fight; a result of a few great leaders. That might explain why democracy has remained a ritual.

[apachelongbow]

I have said this before, I'll say it again. We need to stop considering India as one homogeneous nation. Nothing is further from reality. We have hotspots of global level prosperity and areas of sub saharan poverty. Even in our relatively prosperous urban areas, the public in the gated communities have a percapita rivaling EU and outside the boundary walls the commoners live like an average Pakistani. Our policies need to be tailor made for this diversity and only then we will be able to remove income disparities.

[warrioraks]

Originally Posted by PreludeSH

Would be happy with even these numbers if only the gap between rich and poor was not so everest sized

Wouldn't PPP be the right measure than using GDP ? We are not that integrated with the global economy (which is in one way protecting us in the current climate). So using dollars to calculate itself leaves a lot of gaps. Not that this will improve the state of 50% of population who are less prosperous that the top 1%

India is ranked 125th on the global scale if we consider GDP (PPP) per capita into account. It is still bad I would say.

So as a country we have two big economic problems it seems:
1. The monetary growth and wealth got distributed highly un-equally.
2. At our current GDP levels, even if the wealth created every year is distributed equally amongst all citizens, it is not enough to give a generally accepted standard of living to the masses because of our low GDP per capita.

Rank 125 means we are right there with smaller African and Asian countries in bottom 1/3rd of the world. We have a long way to go on the economic front.

[shankar.balan]

The ‘real’ tax paying population in India is probably less than 4-5%. Income taxes I mean. With added GST burden this same tax paying population is parting with close to 65% of its earnings. With these taxes the country is supposed to look after the poor and build infra and so on.

In this federal system the states which are generating income and house the tax paying population are few. The states which have large populations but which pay very little by way of taxes are numerous.

Basically the 4-5% are slaving away to ensure that the remaining 95-96% are fed.

And with all the populist politically motivated policies and budgets of successive governments since Independence, the poor are robbed of an incentive to work and earn.

And the procreation/ reproduction rates in the less productive states are way higher than in the productive states.

Therefore, there is and will always be, a fundamental disconnect, as long as this state of affairs is allowed to continue.

Its only going to get worse once the representation in Parliament is changed and they start allocating seats based on population.

Ideally representation should be according to contribution by way of taxes and knowledge, not just ‘bodies’.

From a per capita income perspective, it will never improve unless there are drastic steps over one or two generations, to control birth rate.

Typically when the population of any species increases in an unbridled manner, there is usually some sort of natural disaster which causes a ‘levelling’ and restores the natural balance.

People may not like this statement of fact, but even Covid, which was supposedly the grim reaper’s great leveller, didn’t make much of a dent here in India in terms of population reduction.

And so we go on….

To paraphrase Churchill’s famous statement on the Battle of Britain - Clearly it is the ‘Few’ who are Owed So Much by So Many; at least in our Indian context at this present moment.