India may be emerging as one of the world’s most consequential economies, but its economic rise masks a striking weakness when measured by individual prosperity: its per capita income remains significantly below Sri Lanka’s.
That contrast was highlighted by geopolitics expert Prof. C. Raja Mohan at the Lanka India Business Association’s India Calling forum, where he cautioned against viewing India’s rapid economic expansion without considering the country’s relatively low income per person.
“We talk about rising India, but we have a long way to go,” Prof. Mohan said, pointing out that India’s per capita income was around $2,800, compared with approximately $5,000 in Sri Lanka.
The comparison offers a different perspective on India’s much-discussed economic rise. While India’s enormous population gives it far greater aggregate economic weight, the size of its economy does not automatically translate into higher individual incomes.
Prof. Mohan argued that India’s scale nevertheless has major international consequences. Economic gains within the country can generate substantial external influence because even incremental improvements across such a large population create significant increases in overall economic capacity.
But the disparity with Sri Lanka raises a broader question: how should India’s economic progress be measured?
For Sri Lanka, the comparison is equally significant. Despite its far smaller economy, its higher per capita income demonstrates that aggregate economic size and individual economic wellbeing are not interchangeable measures.
The issue becomes particularly important as India and Sri Lanka consider deeper economic ties. Prof. Mohan said closer integration should not be justified simply because the two countries are geographically close. Instead, economic decisions should be assessed according to whether they actually improve productivity, reduce costs and strengthen long-term capabilities.
“Does it increase your capability? Is it cheaper? What are the long-term costs of a particular way of approaching things?” he asked.
His warning also extended to investment. Governments and businesses, he said, should examine the cost of capital, borrowing conditions and long-term equity implications rather than operate on the assumption that every source of funding is automatically beneficial.
The argument presents a challenge for both countries. India’s economic transformation needs.