5 states of India join ‘Upper-Middle Income’ club
The real idea of how fast the country’s economy is growing can be seen when we look beyond the national average and look at the situation of the states. Recently, the World Bank in its new report has promoted countries like Sri Lanka, Vietnam and Philippines to the high income group on the basis of their better earnings. When India was seen on this scale, a very interesting picture emerged.
India is still a ‘lower-middle income’ country with a national per capita income (Atlas method) of $2,760. This figure is slightly more than the global average of lower-middle income of $2,488. But, according to a report by Moneycontrol, five states of the country have performed amazingly and have crossed the World Bank’s ‘upper-middle income’ cutoff of $4,636.
To understand this, it is important to know the scale of the World Bank. The bank considers those earning less than $1,175 as ‘low income’, those earning $1,175 to $4,635 as ‘lower-middle income’, those earning $4,636 to $14,375 as ‘upper-middle income’ and those above $14,375 as ‘high income’.
Delhi and Karnataka won
If we look at the data of states, Delhi is at first place in the entire country with a per capita income of $6,217. After this comes Karnataka ($5,579), Telangana ($5,407), Tamil Nadu ($5,329) and Gujarat ($4,734). These five states have gone far above the upper-middle income benchmark of the World Bank.
If we compare these states with other countries of the world, today Delhi’s economy is competing with countries like South Africa ($6,270), Fiji ($6,230) and Mongolia ($6,210). At the same time, the per capita income of Karnataka and Telangana has become more than that of Indonesia ($5,120) and Vietnam ($4,970). This is a big achievement, because in the year 1994, no big state of India came even close to this income group.
Maharashtra and Haryana narrowly missed
There are some states in this list, which missed out on joining this club by a very small margin. The per capita income of Maharashtra, considered the economic capital of the country, was $4,628. That means this state remained just 8 dollars behind the cutoff for upper-middle income. Similarly, Haryana missed the benchmark by just $9 with an income of $4,627 and Kerala missed the benchmark by just $26 with an income of $4,610.
Situation in UP-Bihar is worrying
On one hand, while some states are making new records of progress, a large part of the country is still struggling with serious economic challenges. Bihar remains India’s poorest large state with a per capita income of $984. The income of Uttar Pradesh has been recorded at $1403 and that of Jharkhand at $1,470. Statistics show that the average income of the people of these three states is less than that of our neighboring country Nepal and many poor countries of Sub-Saharan Africa.
In this era of economic progress, this gap between the states is continuously widening. The Gini coefficient, which measures inequality, which was 0.230 in the year 1994-95, has increased to 0.261 in the projections for 2025-26. The gap between the richest and poorest states has increased from 2.38 times to 3.73 times. That is, there has been economic development in the country, but not all the states got its benefits equally.
Who lost what and what gained in the journey of 30 years
If we analyze the development of the last three decades, the middle-income states have progressed the fastest. The economy of these states has grown 36.7 times since 1994-95. At the same time, a growth of 28.3 times was seen in the group of richest states and only 26.6 times in the group of poorest states.
The fortunes of many states have completely changed in these thirty years. Once the per capita income of Uttar Pradesh and Odisha was almost equal, but today the people of Odisha earn 75 percent more than the people of UP. Similarly, the per capita income of Assam, which was once at the level of Jharkhand, is today 48 percent more than Jharkhand. Punjab has suffered the biggest loss. Punjab, which was the highest earning state in the country in 1994-95, has today reached the level of Rajasthan and has left behind seven other states of the country.
