Total GDP v Per Capita GDP
As India became 4th largest economy the naysayers came out of the woodwork talking about per capita GDP. It is time to clarify the issue again.
I have written extensively about the advantages of tracking per Capita GDP. In simple terms, the total GDP represents the size of the pie - the total income of our family (i.e. country), whereas Per Capita GDP represents our pocket money, i.e. what we spend on ourselves.
Higher Total GDP means…
A larger family income, i.e., Total GDP, means we can afford better houses, TVs, cars, and go on family holidays, etc.
For a nation, that means more infrastructure - more roads, more ports, more airports, better defence, vaccines in times of pandemics, food support, healthcare support, better negotiations at the WTO, UN, UN Security Council, IMF, and WB, etc.
Higher total GDP allows the nation to take up challenging infrastructure projects like tunnels in Kashmir (like the Zoji-la Tunnel), bridges across Brahmaputra, electrification of trains, Vande Bharat, Aircraft Carriers, submarines and even AMCA development. It means we can manufacture COVID vaccines for the world, support farmers in distress and bring people out of poverty by subsidising their food and gas.
Higher per Capita GDP means…
The larger our pocket money, the better our quality of life. We can afford a bike, pay for parties, and buy good clothes and better equipment. Similarly, for a nation, higher per Capita income translates to a better quality of life, better ports, better roads, personal health translates into Olympic medals, entrepreneurial ventures, better cars and phones, as well as better toothpaste and medicines too.
You can see how lifestyles change with earnings by visiting the Gapminder website. I have explained this in this post.
Similarly, a higher per Capita GDP translates to better nutrition, personal health, and the development of sports, ultimately leading to Olympic medals. I explained this aspect in the post below.
First rises the size of the pie, THEN the share of the pie rises.
We have observed, even in our own families, that when the family income increases, you don’t immediately spend on luxuries. Instead, you invest and prepare for the future. Once your future is secured and you have covered the basic necessities, then you get extra pocket money.
India is at a point where we have invested a reasonable amount in our future. We will enter a phase where per-capita GDP will start rising quickly and start accelerating. We will begin to notice some interesting changes in our day-to-day lives. I have discussed some of these in this post.
It is a time to rejoice - push on the accelerator!
Unlike what the defeatist naysayers are highlighting, this is a time to rejoice and push ahead confidently. Things will get better soon—and things will start getting even better even faster. That does not mean we can sit back and enjoy. It means we will also have to up our game. We will have to move from a Test cricket mindset to an ODI mindset and then to a T20 mindset. It is us; we drive this change. Let's do it!