Claim of doubling of incomes is false

No-one eats an income but only the things that are bought with it, and the money in the purse is thus worth only what can be bought with it. So, when the National Statistical Office’s figures show that India’s per capita income almost doubled from Rs 86,647 in 2014-15, when the Narendra Modi government came to power, to Rs 1.72 lakh in 2022-23, note that it is only the rise in ‘nominal’ terms.

It does not mean a doubling of the purchasing power of people. Adjusted against inflation, the ‘real’ rise in per capita income between 2014-15 and 2022-23 is closer to 35 per cent at constant 2011 prices. By the same token, note that in the period 2006-7 to 2014-15, under the UPA government, nominal per capita income rose from Rs 33,717 to 86,647, a 157 per cent rise, against the 98.5 per cent rise in 2014-15 to 2022-23.

Since inflation reduces the value of money, the claim of the doubling of incomes since 2014 is unreal as it has to be tempered with the reality of cheaper money. Financial strength and economic welfare have to be judged on the basis of the relative value of the unit that is used to measure them. In 2022-23, for instance, the real rise in per capita income was 6 per cent. It cannot be considered to have greatly improved a person’s lot. The person has Rs 106 now where he had Rs 100 in 2021-22.

There is another question mark on this income and its increase, too, when the distribution of income in the country is considered. The per capita income is derived by dividing the total national income by the total population. It is a statistical measure and hides the unequal distribution of wealth and incomes. In reality, more than 90 per cent of the people would be earning less than the average per capita income, and only the top 10 per cent of the population earn much more than that income in a society where income distribution is very unequal.

According to Oxfam’s latest report on wealth and inequality, the top 1 per cent in India owned more than 40.5 per cent of the country’s total wealth in 2021 while the bottom 50 per cent of the population had around 3 per cent of the total wealth. In the pandemic years, more than two-thirds of the new wealth generated went to the top 1 per cent, even as 56 million Indians dropped below poverty line. Note that the government has expanded the subsidised food grains programme and now gives food grains free to 810 million Indians. That is no sign of incomes of ordinary people doubling, is it? Per capita income is good as a national statistic but it is meaningful to individuals and households only with reference to inflation and inequality.