When people ask whether a country, a state or a family is “doing well”, they usually mean more than money. Economists have developed a set of markers, each measuring something different and each blind to something else. Understanding them helps you read the news more intelligently — and apply the same thinking to your own household, where the question is not only “how much do we have?” but “how secure and well-organised are we?”
GDP: the size of the economy
Gross Domestic Product measures the value of all goods and services produced in a year. For Indian states it is called Gross State Domestic Product (GSDP). Maharashtra has the largest state economy in India, contributing roughly an eighth of the national total. GDP tells you about economic size and growth, but not how an average person lives: a big economy with a big population can still have modest incomes.
Income per person: the average living standard
Divide the economy by the population and you get income per person. On this measure, small states such as Goa and Sikkim rank above most large ones, and the gap between the highest and the lowest states in India is several times over. You can compare every state on our interactive India Wealth Atlas.
An average still hides a lot. A state where a few people earn a great deal can have the same average as one where most people earn a middling amount.
The Human Development Index
The UNDP’s Human Development Index combines life expectancy, years of schooling and income per person into one number between 0 and 1. It captures the idea that wealth is meant to buy longer, healthier, better-educated lives. India’s HDI was 0.685 in 2023, placing it in the “medium human development” group. Kerala scores high on HDI despite not having the highest income, largely because of long-standing investment in health and education.
Happiness
The World Happiness Report asks people in each country to rate their lives on a 0–10 scale and relates the answers to income, social support, healthy life expectancy, freedom to make life choices, generosity and trust. Nordic countries such as Finland have topped it for years. The lesson is that beyond a comfortable level, security, relationships and a sense of control matter more than extra income.
Inequality
The Gini coefficient, from 0 (everyone has the same) to 1 (one person has everything), shows how evenly income, spending or wealth is shared. The answer depends on what you measure: by household consumption, the World Bank puts India’s Gini at about 0.26 for 2022–23, among the lower figures in the world; studies of income and wealth find much higher concentration at the top. Both can be true at once, because spending is far more evenly spread than savings and assets.
Financial literacy
A global survey by S&P in 2014 found that only about a quarter of Indian adults understood basic ideas such as interest, inflation and diversification; India’s own National Centre for Financial Education found a similar figure, about 27%, in 2019. Financial literacy predicts future wealth: people who understand compounding start earlier, borrow more carefully and avoid expensive mistakes.
What each measure misses
| Measure | Tells you | Misses |
|---|---|---|
| GDP / GSDP | Size and growth of the economy | How income is shared; quality of life |
| Income per person | Average living standard | Inequality; savings and assets |
| HDI | Health, education and income together | Happiness; environmental cost |
| Happiness | How people feel about their lives | Material needs that are still unmet |
| Gini | How evenly things are shared | How much there is to share |
Your family’s wealth check
A household can be measured the same way — not just by how much it has, but by how resilient and well-organised it is. Common rules of thumb give a starting point:
| Marker | What to measure | A healthy range |
|---|---|---|
| Savings rate | Share of take-home pay invested each month | 15–20% or more |
| Emergency cushion | Months of essential expenses you could cover | 6 months or more |
| Debt load | All EMIs as a share of take-home pay | Below about 35–40% |
| Life cover | Term cover compared with yearly income | Often 10–15 times income |
| Health cover | Family floater sum insured | Enough for a major hospital stay in your city |
| Wealth for your age | Investments compared with yearly income | Rising steadily every year |
| Paperwork | Nominees, a will and written goals | All in place, known to the family |
No family scores perfectly on every line, and the ranges are guides, not rules. The value is in seeing the weakest marker clearly — for many households it is the emergency fund or the paperwork — and fixing that first.
Frequently asked questions
Why does a country’s GDP matter to my investments?
Over long periods, company profits tend to grow with the economy, and equity returns follow profits. A fast-growing economy is a supportive backdrop, though not a guarantee of good returns in any particular year.
How often should a family check its own markers?
Once a year is enough — the same day you review your SIPs and insurance.
We combined these markers into a free, private Wealth Score checkup. It takes two minutes and shows the three actions that would improve your score the most.
Figures above are illustrations based on assumed rates of return and are not a promise or guarantee of future returns. Mutual fund investments are subject to market risks, read all scheme related documents carefully. WishWiseWealth is an AMFI-registered Mutual Fund Distributor (ARN-188221).