Q.Why does India's per-capita income remain comparatively low even though its total GDP has been growing rapidly? Explain briefly.
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Start your 14-day free trial to unlock the full solution →Per Capita Income is defined as . This formula shows that PCI depends not just on how fast the numerator (national income/GDP) grows, but also on the size and growth rate of the denominator (population).
India's total GDP has grown substantially over the decades, but with a very large population base, the same absolute increase in national income has to be divided among a much larger number of people than in a smaller country with comparable GDP growth. If population grows at a meaningful rate alongside GDP, a large part of the gain in national income is effectively absorbed by having to be shared across more people, so per capita income rises more slowly than GDP itself. …
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