How India can become a high-income country by 2047
What's the story
India's economy needs to grow at an annual rate of 7.5% over the next 21 years, to reach the World Bank's high-income threshold of $13,936 in gross national income (GNI) per capita by 2047. This is according to SBI Research, a unit of State Bank of India. However, it's worth noting that these thresholds are updated annually by the World Bank, taking into account inflation and currency fluctuations.
Growth challenge
India's economic growth must outpace global average
To climb the income ladder, India will have to grow faster than the global average. If the high-income threshold jumps to around $18,000 per capita by 2047, India would need an annual per capita income growth of nearly 8.9%. This translates into a nominal GDP growth of around 11.5% in dollar terms after accounting for population growth and global inflation.
Economic performance
India's nominal GDP growth since 2019
India's nominal GDP has surged at a compounded annual rate of 7.8% since 2019. Despite global shocks, the long-term trends support these projections with nominal GDP growth in dollar terms averaging close to 11% in the pre-pandemic period and about 10% over the last two decades. SBI Research also predicts that India will become a $5 trillion economy by 2027, albeit slightly later than Prime Minister Narendra Modi's initial target during the pandemic peak.
Income classification
Current economic status and future prospects
The World Bank classifies economies into four income groups based on GNI per capita. They are low-income (up to $1,135), lower middle-income ($1,136 to $4,495), upper middle-income ($4,496 to $13,935), and high-income (above $13,935). India is currently in the lower middle-income category but is expected to join China and Indonesia in the upper middle-income classification after its transition. This trajectory mirrors that of China and Indonesia which were low-income countries in 1990 with per capita incomes of just $330.