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ORCID iD

0000-0003-2626-4525

Article Type

Research Article

Abstract

This paper challenges the idea that India's economic liberalization in 1991 was solely responsible for the transition in Per Capita Income (PCI). The paper investigates the complex dynamics between educational attainment, economic policies, and their impact on PCI in India. By analyzing the relationship between PCI and literacy rate, the study aims to answer the intriguing question of whether the strong correlation observed between PCI and the literacy rate is a mere coincidence. Additionally, looking at the diode equation's good fit to the data on PCI vs literacy rate, for the period 1980-2020, the study attempts to determine whether or not crossing a certain threshold in literacy rate is necessary for rapid economic development. Based on the statistics available for India, the findings revealed that the literacy rate in India increased with time as a result of sustained efforts by the government to ensure an increase in enrollment in the formal education system, all the while ensuring a low dropout rate through subsidization of education. The findings revealed a significant relationship between PCI and literacy rate. It was found that the increase in PCI post-1991 was due to the hike in female enrollment in the decade 1991-2000. Hence, the transition in PCI can be attributed to the interplay of factors such as government social welfare schemes in the education sector, which have reduced dropout rates and increased enrollment. The analysis also revealed that there is an association between the minimal pay of an illiterate laborer and the strength of the power in the PCI and literacy relationship. When a minimum wage is established, educated workers' pay increases, guaranteeing that the relationship between PCI and literacy is significant.

Keywords

Per Capita Income, Literacy Rate, Development

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