New Delhi: India, despite being a trillion dollar economy, has been ranked behind all but four countries in Asia in terms of per capita income, a new Asian Development Bank (ADB) report said.
The report is part of the World Bank’s 2005 International Comparison Programme (ICP), a data standardization project for 146 countries that will make evaluating incomes and expenditures across the globe easier.
ADB is in charge of the Asian region studies for the ICP to evolve purchasing power parity (PPP). PPP, which corrects for the exchange rate differential between countries, allows users to compare real economic outputs across countries at a common set of average international prices.
The latest study, in which India and China took part together for the first time, uses the Hong Kong dollar as the base currency and 2005 as the base year. Bishnu Pant, assistant chief economist, ADB, said the HK dollar was used as a base currency as it was broad-based and its value was well recognized in the region.
The study has ranked countries in terms of per capita gross domestic product (GDP), actual final consumption expenditure (AFCE) and gross fixed capital formation (GFCF). AFCE is the sum of consumption expenditures by households and government, and according to ADB is the best available measure of household living standards; GFCF measures the investment levels in the economy.
The ADB study, using a PPP of Rs2.58 to HK$1, ranked India 19th of 23 economies in the region, with a real per capita GDP of HK$12,090, below the regional average of HK$20,432. The average Pakistani earns higher, or HK$13,628, while China is 10th, with HK$23,267.
Brunei tops the list with HK$269,971; at HK$235,923, the average Singaporean earns almost 20 times more than an Indian. South Korea and Japan, now members of the OECD, the rich nations’ club, were not included in the study.
Ifzal Ali, ADB chief economist, said, “This is the beginning of a global and regional effort which, in turn, will improve the robustness of future PPP estimates.”
In terms of AFCE, China and India dip below the regional average due to their large populations. India is 18th with an expenditure of HK$9,293, while China is 16th with HK$11,189. Ranked on per capita GFCF, India was 18th with HK$2,554 against 11th for China’s at HK$8,066.
“The region has miles to go before celebrating its economic success,” Ali said. “Inequalities are still very high, considering that in terms of real GDP, the average citizen of Brunei earns 40 times that of an average Nepali.”