Disparities in states' income

Richer states, mostly in the south and western India, are attracting manufacturing investments in a big way and growing much faster than the national average

- N Chandra Mohan

THE LATEST OFFICIAL data on the per capita income of states indicates that the richer ones—with higher incomes than the national average—are becoming richer much faster than the rest. In 2011-12, Gujarat's real per capita income was 138% of the national average, which rose to 180% in 2023-24. The relative per capita income of Bihar, the poorest state, deteriorated from 34% to 29.6% over this period. Gujarat is becoming more prosperous while an average person in Bihar has an income level 70% lower than an average Indian. Many of the richer states are south of the Vindhyas—Karnataka, Tamil Nadu, Telangana, Kerala, and Andhra Pradesh—and in the west, like Gujarat and Maharashtra.

A caveat on per capita income estimates is in order. As pointed by economists like NR Bhanumurthy, director of the Madras School of Economics—who wrote on the topic in Financial Express—per capita income at the national level estimated for the base year 2011-12 is the net national income divided by the population based on the 2011 Census. While population projections at an all-India level are possible, estimates at the state-level are weak as they don't capture migration and falling fertility rates. The net state domestic product estimates that are used for state per capita income are as per allocations from the all-India level based on ratios fixed for 2011-12.