Average vs Median and India's Per Capita!

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Let's face some real s**t by understanding a basic concept of Average vs Median.

In finance, we mostly use Median instead of Average to eliminate the influence of outliers.

For eg, assume a data set of - 1,1,1,1,1,1,1,1,1,91.

Its Average would be 10 which does not represent any data point, it is 10 times the majority and 1/9th of the minority.

On the other hand, its median would be 1, which is closer to the majority.

Also, the most important thing to remember is that - "The more the difference between Median and Average, the More the data is skewed and influenced by Outliers i.e. increase in disparity."

Here's the real s**t:-

Let's try to find the Average and Median Income of an Indian.

Check the graph below:-


The median income of an Indian is ~ 8,000 INR i.e. 96,000 INR p.a. (See 50 Percentile on X-Axis)

Average Income on the other hand is ~17,000 INR i.e. 2,04,000 p.a. which is at approx. 83rd percentile.

That means if you're under the illusion of 50%, created by average, in reality, 83% of Indians are earning less than the average i.e. just 17000 Per month. 

Most of the Indians can relate with 8000 p.m.

And just for comparison, if we consider Rs. 50 per meal, more than 50% of income will go towards food only.

If you think, the Govt. doesn't know that, then why would they launch a program to feed 81Cr people?

If you think Indians' income is growing then rethink by considering the Top and Lower of Pyramid. 

The top 10% takes 57% of the total, and Botton 50% is just at 13%.

As per the recent Goldman Sachs report, the number of Indians who will consume and drive the growth of the Indian Economy which they call an "Affluent Population" earning more than ~ Rs. 8 Lacs will be Approx 10 Crs. in Number.

The Question is - What about the other 130 Crs.?

What about those 81 Cr. who cannot afford food even?

(Disclaimer: Median Income is not available from any official sources, so I've taken numbers from WID and Stats of India, which may not be very accurate, but still give an idea of the whole picture.) 

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