India’s per capita income during 2020-21 is estimated to be Rs 127,768, showing a decline of 4.8%, as compared to Rs 134,186 during 2019-20, primarily due to the economic impact of the pandemic and lockdowns.
Per capita personal income has become an increasingly common measure of the effectiveness of economic development policy.
Per capita income is defined as the total Gross Domestic Product (GDP) of a country divided by the number of people in the country. It is a measure of how rich the country’s citizens are on average.
So, the citizens of India have grown poorer during the last year. Similarly, a state’s per capita income is defined by the state GDP divided by the state population.
How much an average Indian earns apart from his/her qualifications and knowledge also depends upon the state of residence?
Some states provide better employment opportunities due to their location, policies, industrialisation, tourism potential, et cetera than others.
Five states — Tamil Nadu, Maharashtra, Gujarat, Karnataka and Andhra Pradesh — account for half of India's factory workers. Level of urbanisation also plays a key role in determining the per capita income.
Other factors which impact per capita income are family composition, share of farming in a region, tax rates, human capital, and factors that are often labeled as socioeconomic, such as the share of immigrants or single-parent households.
State level differences in per capita income also highlight the growing economic inequality in India in the period of economic reforms. The rich states are becoming richer and poor states poorer.
Regional differences in the standard of living can have serious implications for the economic and political functioning of national economies
At the beginning of the millennium, the per capita income of the five richest states was 145% higher than that of the bottom five states. That difference rose to 289% in 2010-11, and further to 322% in 2018-19.
Goa has the highest per capita income at Rs 4.66 lakh, which is more than three times the national average. This is followed by Sikkim at Rs 4.25 lakh and Delhi at Rs 3.75 lakh.
All the southern states are in the top 10 list, except for Andhra Pradesh. States with less than equal to 2.5 crore population occupy 5 of the top 10 slots strengthening the logic for smaller states.
None of the eastern states are in the top 10 list. The degree of urbanisation of these 10 states is 51%, much higher than the national average of 35%.
Sikkim has the lowest level of urbanisation but still is ranked number two in the list.
Top 10 States with Highest Per Capita Income
Note: Union Territories who have an assembly and Chief Minister have been included in the list.
Other states which have higher per capita income than the national average are Mizoram, Uttarakhand, Maharashtra, Himachal, Andhra, Arunachal and Punjab. Four of these states are again small states.
All the countries tagged to the state per capita income also are smaller in number of people they have except Colombia. These small countries and even Palestine which has been ravaged by war with Israel have a higher per capita income than India.
An average income earner in the highest per capita income state Goa (Rs 4.6 lakh) is exempt from tax. The very low per capita income in India which is roughly Rs 10,000 per month is also one of the reasons why a few people pay income tax.