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India may take 75 years to reach a quarter of US per capita income, says World Bank
The World Bank also referenced Prime Minister Narendra Modi's vision of transforming India into a developed economy by 2047.
Newly released report by World Bank on the Middle Income Trap. / X/@WorldBank
India will take nearly 75 years to achieve a quarter of the per capita income levels of the United States if current economic trends persist, according to the World Bank’s new report.
The report titled, ‘World Development Report 2024: The Middle IncomeTrap’ highlighted significant challenges faced by over 100 countries, including India, in their efforts to become high-income nations in the coming decades.
It emphasized that countries often encounter a "trap" when their annual GDP per person reaches around 10 percent of the U.S. level, currently estimated at $8,000. This income level places them within the "middle-income" category.
The report states that since 1990, only 34 middle-income economies have successfully transitioned to high-income status. The report pointed out that more than a third of these countries benefited from integration into the European Union or discovered oil reserves.
As of the end of 2023, 108 countries were classified as middle-income, with annual GDP per capita ranging from $1,136 to $13,845. These countries account for about 75 percent of the global population, with two-thirds of their inhabitants living in extreme poverty. India was listed among those countries.
The institution referenced Prime Minister Narendra Modi's vision of transforming India into a developed economy by 2047, when the nation will celebrate 100 years of independence. While Modi has frequently expressed this ambition, the report suggested that achieving such a transition within 50 years, as South Korea did in 25, would be a considerable feat.
In April, Franziska Ohnsorge, the World Bank’s Chief Economist for South Asia, emphasized that India would need significant reforms to boost employment to meet its 2047 target.
Indermit Gill, Chief Economist at the World Bank Group, warned of the formidable challenges ahead. "The road ahead has even stiffer challenges than those seen in the past: rapidly aging populations and burgeoning debt, fierce geopolitical and trade frictions, and the growing difficulty of speeding up economic progress without fouling the environment," he stated.
He criticized the outdated policies many middle-income countries still rely on, describing it as "like driving a car just in first gear and trying to make it go faster."
Gill further noted that if countries do not modernize their strategies, most will fail to create "reasonably prosperous societies by the middle of this century." The report proposed a three-pronged approach for escaping the middle-income trap: focusing on investment, incorporating new technologies from abroad, and balancing these with innovation.
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