Trends of Per Capita Income of Indian States

India is a very diverse country both in geographical and cultural aspects. There are 29 states with 8 Union territories in the country. The citizen's primary source of income in the country is agriculture, either directly or indirectly. Almost 58%-60% of people are dependent on the primary sector which is the agricultural sector. However, the work culture is slowly shifting towards the secondary sectors such as banking, teaching, Private companies, etc. In one way or the other, the people search for a source of income for their livelihood. Money is significant not only for personal development but also for the development of the nation. 

The development of the nation depends upon the income of the individuals. As there are 29 states in India, the per capita income of each state is taken as a tool to measure the economic condition of the people in the state. As a result, the central government can focus on the relatively poor states with low per capita income to reduce poverty in those states. It is crucial to work on developing the lowest per capita income state of India rather than focusing on the high-income states in India. Goa is one of the states with the highest per capita income in India. It has the highest per capita income in India 2019-20 and also in the year 2020-21. The income is mainly expressed in the form of NSDP. The people's income survey in each state is done to make the list of per capita income of India state-wise. Let us first know the details about the per capita income.

What is Per Capita Income?

The per capita income is a measure to depict the income of people. It is the mean income or the average income earned by a person within a given geographical area. The area may be a city, state, or the whole country. 

For the whole country, it can be deduced by dividing the total national income by the population size. It mainly determines the standard of living of the people in a particular place or company. It helps determine the lowest per capita income state in India and the highest per capita income state in India. Moreover, it helps to determine the development status of a country. 

In India, there was a good development as there was a rise in per capita income, as indicated in the survey of 2019-20. However, due to the tragic hit by the second wave of the pandemic, the state's per capita income was reduced by 4.8% because many people became unemployed due to the shutting of several markets and companies. Now, let us take a look at the per capita income of India state-wise.

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Per Capita Income Trends in the Different States

India had a per capita income of 1,34,000/ annum in 2019-20, which is a good rise than the per capita income in 2018-19. However, it reduced by 4.8% in 2020-21 due to colossal unemployment caused by the pandemic.

First, let's talk about the high-income states in India. 

Goa which is situated in the southwest of India has the highest per capita income in India. The per capita income of Goa is around 460,000 rupees (as surveyed in the year 2019-20) which makes it the highest per capita income state in India 2019. 

The most common question is – Which state has the highest per capita income. There is no specific answer to this because the per capita income of different states differs in different years. Therefore, we have presented a list of the top ten high-income states in India with the NSDP per capita as in the year 2019-20. The list will give an overall idea about which state of India has the highest per capita income.

1. Goa – Rs 5,20,031

2. Sikkim – Rs. 4,87,196

3. Delhi – Rs. 4,14,711

4. Chandigarh – Rs. 3,59,027

5. Haryana – Rs 2,72,844

6. Telangana – Rs. 2,49,820

7. Karnataka – Rs. 2,46,419

8. Tamil Nadu – Rs. 2,43,198

9. Kerala – Rs. 2,43,761

10. Gujarat – Rs. 2,43,761

The states mentioned above have people with good standards of living with lower poverty.

However, some states, such as Bihar, have very low per capita income. Therefore, poverty is also more. One of the striking facts is the per capita income of Jharkhand, which is low despite being the wealthiest state with minerals in India.

People's standard of living in these states is lower, and sometimes people don't even have access to necessities. 

Following is the poor state in India 2019 list with their NSDP per capita.

1. Bihar – Rs. 50,735

2. Uttar Pradesh – Rs. 74,141

3. Jharkhand – Rs. 87,127

4. Manipur – Rs. 92,430 

5. Meghalaya – Rs. 1,02,672

6. Assam – Rs.1,01,851

7. Madhya Pradesh – Rs.1,13,079

8. Chhattisgarh – Rs. 1,05,281

9. Odisha – Rs 1,19,075

10. Rajasthan – Rs. 1,28,319

From the above list, it is clear which state has the lowest per capita income. Therefore, the government can work towards developing these states to improve the standard of living of people living in these states. 

The method of measuring the income of people using per capita income has several advantages. 

Advantages of using Per Capita Income 

• The most important advantage is that it is straightforward to calculate. You need the total income of people in the state and divide it by the population of the people. The process of calculation is not very complex.

• It gives us an idea about the standard of living of people in different states. We can guess the extent of poverty in a state by seeing the states' per capita income.

For example, the per capita income of Goa is 3.01 times higher than the nation, which is around 7.18 times greater than the lowest per capita income state in India. It proves that people's standard of living in Goa is good while the standard of living of many people in Bihar is lower than usual.

• It is helpful to analyze the people when a large population is involved, such as the population of a state or country.

• It determines the affordability or purchasing capacity of an area.

Limitations of Per Capita Income 

With the vast number of advantages of per capita income comes the limitations also. The limitations of using this measure for income calculation are as follows: -

• It doesn't consider the amount of inflation in an economy. Inflation determines the rate at which the prices are increasing over time. As there is inflation, the purchasing capacity of the person is reduced, which may affect the per capita income.

• It doesn't calculate the savings or account of a person or a family.

• In the calculation, the whole population is included. This also consists of the children, which is not correct. The children do not earn any money; therefore, including them to determine a state's income can negatively affect the data.

• Several other factors are not considered, but they should be regarded to determine a country's income. It must include the conditions of work, education status, health status, etc. Therefore, it doesn't give a good idea about the conditions of the people or the welfare of the people.

Instead of the limitations involved, the per capita income of a state still gives a decent idea about the economic conditions of the people. This helps the government to put efforts accordingly to improve the condition of a state.