INCOME DISTANCE RATIO

• Income distance measures the gap between a state’s income and the highest income state.

• State income is calculated by averaging the per capita Gross State Domestic Product (GSDP) over the three-year span from 2015-16 to 2017-18.

• States with lower per capita income receive a larger share to ensure equitable distribution among states.

• This term, ‘Income Distance,’ is employed by the Finance Commission of India for resource allocation among states.

• State income is determined through the average per capita GSDP during a specified time frames.

•  The aim is to narrow the income disparities between states and promote balanced development.