Why Sri Lanka is now upper-middle-income economy but India isn't
What's the story
The World Bank has upgraded Sri Lanka, Vietnam, and the Philippines to upper-middle-income status in its latest country income classification. The move recognizes their economic progress after years of growth and recovery. However, India continues to remain in the lower-middle-income category where it has been since 2007. The reason behind this lies in India's Gross National Income (GNI) per capita, which is estimated at around $2,500-$2,700, well below the upper-middle-income threshold of $4,496.
Classification criteria
Understanding the classification process
The World Bank classifies economies into four income groups: high-income, upper-middle-income, lower-middle-income, and low-income. The rankings are based on GNI per capita estimates from the previous calendar year. This year's assessment covered 218 countries and will remain the global reference until June 2027. Unlike GDP, which measures value of goods/services produced within a country's borders, GNI measures total income earned by residents/businesses regardless of where it's generated.
Regional comparison
Southeast Asia's economic progress
In addition to Sri Lanka, Vietnam, and the Philippines, all five major Southeast Asian economies, including Singapore, Malaysia and Thailand, are now classified as upper-middle-income or above by the World Bank. This highlights a regional trend of economic growth and recovery in these countries. The classification could also boost investor confidence in these nations as they continue to progress economically.