THE CONCEPT OF  INDIAN ECONOMY

Per Capita Income:

Per capita income is a measure of the amount of money earned per person in a nation or geographic region. Per capita income for a nation is calculated by dividing the country's national income by its population. Per capita income is also often used to measure a country's standard of living.

We cannot compare the National Income of different countries as small countries will have less National Income than bigger countries. So, PCI is a better yardstick for comparison.

Comparisons of per capita income over time need to consider inflation. Without adjusting for inflation, figures tend to overstate the effects of economic growth.

International comparisons can be distorted by cost-of-living differences not reflected in exchange rates. Where the objective is to compare living standards between countries, adjusting for differences in purchasing power parity will more accurately reflect what people are actually able to buy with their money.

It is a mean value and does not reflect income distribution. If a country's income distribution is skewed, a small wealthy class can increase per capita income substantially while the majority of the population has no change in income.

GDP (in US$) per capita by country 2019[ WORLD BANK]

RANK	COUNTRY	PCI NOMINAL		PCI PPP
1	MONACO	190532	3	115700
6	SWITZERLAND	85135	11	71352
10	UNITED STATES	65134	15	63544
13	SINGAPORE	64103	4	98526
31	JAPAN	40063	43	42197
162	INDIA	2116	155	6454
148	BHUTAN	3361	135	11508
136	SRI LANKA	3940	118	13225
114	JAMAICA	5369	102	9222

Poverty Line:

Poverty line is the level of income to meet the minimum living conditions. Poverty line is the amount of money needed for a person to meet his basic needs. It is defined as the money value of the goods and services needed to provide basic welfare to an individual.

In October 2015, the World Bank updated the International Poverty Line (IPL), a global absolute minimum, to $1.90 per day. By this measure, the percentage of the global population living in absolute poverty fell from over 80% in 1800 to 10% by 2015, according to United Nations estimates, which found roughly 734 million people, remained in absolute poverty.

The basic needs approach is one of the major approaches to the measurement of absolute poverty in developing countries. It attempts to define the absolute minimum resources necessary for long-term physical well-being, usually in terms of consumption goods. The poverty line is then defined as the amount of income required to satisfy those needs.

A traditional list of immediate "basic needs" is food (including water), shelter, and clothing. Many modern lists emphasize the minimum level of consumption of 'basic needs' of not just food, water, and shelter, but also sanitation, education, and health care. Different agencies use different lists. According to a UN declaration that resulted from the World Summit on Social Development in Copenhagen in 1995, absolute poverty is "a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information. It depends not only on income, but also on access to services."

India's official poverty level as of 2005 is split according to rural versus urban thresholds. For urban dwellers, the poverty line is defined as living on less than 538.60 rupees (approximately US$12) per month, whereas for rural dwellers, it is defined as living on less than 356.35 rupees per month (approximately US$7.50). In 2019, the Indian government stated that 6.7% of its population is below its official poverty limit. As India is one of the fastest-growing economies in 2018, poverty is on the decline in the country, with close to 44 Indians escaping extreme poverty every minute, as per the World Poverty Clock. India lifted 271 million people out of poverty in a 10-year time period from 2005/06 to 2015/16. It has around 84 million people living in extreme poverty which makes up ~6% of its total population as of May 2021.

Sectors In the Economy:

The three-sector model in economics divides economies into three sectors of activity: extraction of raw materials (primary), manufacturing (secondary), and service industries which exist to facilitate the transport, distribution and sale of goods produced in the secondary sector (tertiary). The model was developed by Allan Fisher, Colin Clark and Jean Fourastié in the first half of the 20th century, and is a representation of an industrial economy. It has been criticized as inappropriate as a representation of the economy in the 21st century.

According to the three-sector model, the main focus of an economy's activity shifts from the primary, through the secondary and finally to the tertiary sector. Countries with a low per capita income are in an early stage of development; the main part of their national income is achieved through production in the primary sector. Countries in a more advanced state of development, with a medium national income, generate their income mostly in the secondary sector. In highly developed countries with a high income, the tertiary sector dominates the total output of the economy.

The rise of the post-industrial economy in which an increasing proportion of economic activity is not directly related to physical goods has led some economists to expand the model by adding a fourth quaternary or fifth quinary sectors, while others have ceased to use the model.

The quaternary sector of the economy is based upon the economic activity that is associated with either the intellectual or knowledge-based economy. This consists of information technology; media; research and development; information-based services such as information-generation and information-sharing; and knowledge-based services such as consultation, education, financial planning, blogging, and designing. Other definitions describe the quaternary sector as pure services. This may consist of the entertainment industry, to describe media, culture, and government.

The quinary sector is the sector that focuses on human services and control, such as government and some charities, as well as creation or non-routine use of information and new technologies, linking slightly with the quaternary sector.

Sometimes referred to as ‘gold collar’ professions, they include special and highly paid skills of senior business executives, government officials, research scientists, financial and legal consultants, etc. The highest level of decision makers or policy makers perform quinary activities.

Sex Ratio:

The sex ratio is the ratio of males to females in a population. In most sexually reproducing species, the ratio tends to be 1:1. ... As of 2021, the global sex ratio at birth is estimated at 101 males to 100 females.

SEX RATIO
INDIA	933
RURAL	946
URBAN	900
KERALA	1058
HARYANA	861

Dependency Ratio:

The dependency ratio is an age-population ratio of those typically not in the labor force (the dependent part ages 0 to 14 and 65+) and those typically in the labor force (the productive part ages 15 to 64). It is used to measure the pressure on the productive population.

As the ratio increases there may be an increased burden on the productive part of the population to maintain the upbringing and pensions of the economically dependent. This results in direct impacts on financial expenditures on things like social security, as well as many indirect consequences.

Dependency ratio in India was 55.2% in 2011 census. In 2018 the ratio comes down to 49.8%.