Economic growth usually refers to quantitative rise in National Income and Per Capita Income of an economy during a period of time. To understand economic growth in India, first we examine the National Income trends and then look into the trends of Per Capita Income in India during the last sixty years.
Rise in National Income:
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The real national income of India has increased at an annual average rate of 4.5 per cent. The rate of growth initially decelerated over the years but has subsequently accelerated continuously.
During the first decade, real income went up by 3.8 per cent, this rate came down to 3.5 per cent in the 1960s, 3.1 per cent in the 1970s and 5.5 per cent in 1980s. In the first three years of the 1990s, the GDP grew at 4 per cent annually.
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In the following four years, the growth rate jumped to 7.1 per cent but only to fall back to 5.2 per cent in the succeeding five years. The major breakthrough occurred and sustained during the period 2003-08; real GDP grew at 8.2 per cent annually in the period 2003-08.
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The world economy went through an unprecedented crisis in 2008-09. The slowdown affected all the countries. By the end of the year 2008-09, India was rapidly returning to the buoyant years preceding 2008.
The economy recovered to grow at 8.0 per cent during 2009-10, and further 8.6 per cent during 2010-11, with projections of 9.0 per cent during 2011-12. The Prime Minister’s Economic Advisory Council (PMEAC) lowered the economic growth projection for the year 2011-12 to 8.2 per cent from 9 per cent.
Rise in Per Capita Income:
Per Capita Income is considered a better index of economic growth. In 1950-51 India’s Per Capita Income at 1999-2000 prices was Rs. 5,708. Since then it rose to Rs. 19,331 in 2004-05 and in 2009-10 it stood at Rs. 33,731.
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There has been more than fourfold increase in real Per Capita Income during the planning period. Growth in Per Capita Income was much less than growth in National Income because of high population growth rate. The Planning Commission expects that country’s Per Capita Income would be doubled in the next 20 years.