India's per capita income on rise

By SiliconIndia   |   Friday, 20 July 2007, 07:00 Hrs
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New Delhi: India will break into the ranks lower middle-income countries this fiscal year, reason - economic growth and an appreciating rupee. At $1,021, the Prime Minister's Economic Advisory Council has projected that per capita income would increase over 25.58 per cent this fiscal, against $831 in 2006-07.

This would put India in the same category as China, though the latter's per capita income was estimated at $2,165 in 2006, reported Business Standard.

This year's projected increase in per capita (in dollar terms) is nearly double the average 13 per cent growth between 2003-04 and 2006-07. In the same four-year period, GDP grew an average 8.6 per cent.

For the current year's projection, the exchange rate assumed is Rs 41 to the dollar. "It is a commendable achievement, but there is so much to do. $1,000 is not a big amount these days," said Saumitra Chaudhuri, Council member and ICRA chief economist.

However, World Bank lead economist in India Dipak Dasgupta described it as a "huge thing" in the broader scheme of things. "It really is the effect of higher GDP growth. The exchange rate does not have that big a role," he said.

"This signals that India is no more a poor country - an impression that was anyway fading away. The International Development Association may reduce aid as India is up a step on the ladder," said Arvind Panagariya, professor of economics, Columbia University.

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