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Exercises · Q8

Q.Why is India, despite having one of the largest aggregate national incomes in the world, still considered to have a low per-capita income?

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Per-capita income is calculated by dividing a country's total national income by its total population. This means a country's per-capita income depends on two things together: how large its total income is, AND how large its population is.

India's total (aggregate) national income is genuinely large in absolute terms — among the largest in the world — reflecting the sheer scale of its economy. However, India also has an extremely large population, over 140 crore people according to recent Census-based and UN estimates. When the large total national income is divided across this very large population, the resulting average (per-capita) income is considerably lower than in developed countries, many of which combine a smaller total national income with a much smaller population, yielding a much higher average income per person. …

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