India's growth to poverty

India is projected to be the world’s fastest-growing large economy for the rest of the decade, according to  the World Bank and the International Monetary Fund. It will also soon be the world’s largest country by population, if it isn’t already. Put together, rapid economic and population growth will soon make India the world’s fifth largest economy overall. In the 2020s it will likely overtake Germany to become the fourth largest, trailing only the United States, China and Japan. Measured in purchasing power parity terms, it’s already number three. That’s great news for the big business groups of Delhi and Mumbai and their billionaire owners.

 India's  36 states and union territories range from giant Uttar Pradesh with more than 200 million people to tiny island territories and former Portuguese enclaves with fewer than half a million. But unfortunately for India, some of its largest states are also its poorest. Uttar Pradesh and neighboring Bihar have a combined population roughly equal to that of the U.S., but a combined GDP less than that of Michigan.

All of India is poor. The GDP per capita of Delhi, the National Capital Territory with a population of 20-25 million, is roughly equal to that of Indonesia at around $4,000. Bihar and Uttar Pradesh, India’s poorest states, are on a par with sub-Saharan Africa (less than $1,000). And geographical disparities matter much more in India than in other large countries. In the United States, the richest state (Massachusetts) has roughly twice the GDP of the poorest (Mississippi). In China the ratio is 4-1 between Beijing and Gansu. In India, Delhi’s GDP per capita is eight times that of Bihar.

In southern India, Bangalore is famous as India’s technology capital, home to companies like Flipkart, Infosys and Wipro, as well as the Indian Institute of Science, India’s top-ranked university. Yet the state of which Bangalore is the capital, Karnataka, has a GDP per capita of around $2,400, roughly the same as Papua New Guinea. Tech entrepreneurs drive to work past open sewers and shantytowns. The real Silicon Valley in California has similar problems with inequality, but the scale of inequality in Bangalore is something completely different.