STATE OF THE ECONOMY 3

Per capita income and consumption prices (constant 1999-2000 prices) grew by an
annual average rate of 3.1 per cent during the 12-
1.2 Growth is of interest not for its own sake
year period, 1980-81 to 1991-92. It accelerated
but for the improvement in public welfare that it
marginally to 3.7 per cent per annum during the
brings about. Economic growth, and in particular
next 11 years, 1992-93 to 2002-03. Since then
there has been a sharp acceleration in the growth
Table 1.2
of per capita income, almost doubling to an average
Per capita income and consumption (in 1999- of 7.2 per cent per annum (2003-04 to 2007-08).
2000 prices) This means that average income would now double
Income Consumption in a decade, well within one generation, instead of
Rs. Growth(%) Rs. Growth(%) after a generation (two decades). The growth rate
of per capita income in 2007-08 is projected to be
IX plan avg. 19245 3.4 12392 3.0
7.2 per cent, the same as the average of the five
X plan avg. 24156 6.2 14677 4.3 years to the current year.
2002-03 20996 2.2 13352 1.1
2003-04 22413 6.8 13918 4.2 1.4 Per capita private final consumption
2004-05 23890 6.6 14413 3.6 expenditure has increased in line with per capita
2005-06 25696 7.6 15422 7.0 income. The growth of per capita consumption
2006-07 27784 8.1 16279 5.6 accelerated from an average of 2.2 per cent per
2007-08 29786 7.2 17145 5.3 year during the 12 years from 1980-81 to 1991-92
Income is taken as GDP at market prices. to 2.6 per cent per year during the next 11 years
Consumption is PFCE. following the reforms of the 1990s. The growth
Per capita is obtained by dividing these by population. rate has almost doubled to 5.1 per cent per year
during the subsequent five years from 2003-04 to
the growth in per capita income, is a broad 2007-08, with the current year’s growth expected
quantitative indicator of the progress made in to be 5.3 per cent, marginally higher than the five-
improving public welfare. Per capita consumption year average. The average growth of consumption
is another quantitative indicator that is useful for is slower than the average growth of income,
judging welfare improvement. It is therefore primarily because of rising saving rates, though
appropriate to start by looking at the changes in rising tax collection rates can also widen the gap
real (i.e. at constant prices) per capita income (during some periods). Year to year changes in
and consumption consumption also suggest that the rise in
1.3 The pace of economic improvement has consumption is a more gradual and steady
moved up considerably during the last five years process, as any sharp changes in income tend to
(including 2007-08). The rate of growth of per capita get adjusted in the saving rate.
income as measured by per capita GDP at market

Figure 1.2 Growth in per capita income

per capita
7 income
6
5
4
3
2
1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

Years

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