India aims to achieve high-income status by 2047, requiring an average annual growth rate of 7.8%, according to a World Bank report. Key recommendations include sustained reforms, higher investment, job creation, and boosting labour force participation, especially among women. Structural transformation from agriculture to productive sectors, trade openness, and innovation are vital. Differentiated policy approaches for states and gradual fiscal consolidation are emphasized. With strong economic foundations and reform momentum, India has the potential to meet this ambitious goal, guided by targeted strategies and inclusive growth.
India is poised to embark on an ambitious journey to become a high-income country by 2047, and achieving this goal will require an average annual growth rate of 7.8 percent over the next 22 years, according to a recent World Bank report. Titled The India Country Economic Memorandum: Becoming a High-Income Economy in a Generation, the report emphasizes the need for comprehensive and sustained reforms to realize this vision.
While India's economic trajectory has established a strong foundation, the report underscores the importance of consistency in reforms. Released on February 28, the findings came just before the announcement of India's GDP growth for the December quarter, which is projected to have risen to 6.3 percent, up from 5.4 percent in the previous quarter. Experts attribute this improvement to rural recovery and increased capital expenditure by the government.
World Bank Country Director for India, Auguste Tano Kouame, emphasized that the 7.8 percent growth rate is an average target and does not need to be achieved every single year. “It can be higher in conducive years and lower in others. There is no need to be worried about year-to-year volatility,” he stated. He also highlighted the importance of focusing on domestic factors rather than relying excessively on global economic conditions.
World Bank Lead Economist Aurelien Kruse echoed this sentiment, advocating for a gradual approach to fiscal consolidation. “Do not argue for aggressive fiscal consolidation; it needs to be gradual. Multidimensional poverty has gone down in the last few years. Welfare outcomes have grown significantly,” he said. Kruse also stressed the need for greater trade participation, especially in light of shifting global supply chains. “India has specific features and must balance global headwinds with unique opportunities from China-plus-one. Openness in trade is crucial, regardless of whether agreements are bilateral or multilateral,” he added.
The report highlights key areas that require attention to sustain long-term growth, including higher investment and job creation. Despite an impressive average growth rate of 7.2 percent over the past three years, private investment has not responded as robustly as expected. “Investment-to-GDP has started to decline, which is a worry, though financial sector conditions remain conducive,” Kruse noted.
Labour force participation, particularly among women, is identified as a critical challenge. “Employment remains concentrated in agriculture and other low-productivity sectors. Women’s participation in paid employment is low, and targeted interventions are necessary,” Kruse added. India’s labour force participation rate stands at 56.4 percent, lower than countries like Vietnam (73 percent) and the Philippines (around 60 percent). The report recommends raising this to over 65 percent by 2047, with a focus on increasing female workforce participation from 35.6 percent to 50 percent.
To achieve the most optimistic growth scenario, the World Bank report outlines three key priorities:
Increasing the total investment rate from the current 33.5 percent of GDP to 40 percent by 2035.
Ensuring faster and more inclusive growth across all states.
Boosting productivity through innovation, digitalisation, and better allocation of resources.
Structural transformation is another area of concern, as 45 percent of employment remains tied to agriculture. The report suggests reallocating resources toward more productive sectors like manufacturing and services to enhance overall productivity. It also calls for strengthening infrastructure, streamlining labour laws, and reducing compliance burdens to improve competitiveness.
Recognizing the diversity among Indian states, the report advocates for differentiated policy approaches. Less-developed states should focus on improving fundamentals such as health, education, and infrastructure, while more advanced states should work toward deeper integration into global value chains and implementing business-friendly reforms. “The Centre can facilitate this growth process through more incentive-driven federal programmes, such as the recently announced Urban Challenge Fund,” the report states.
Despite the challenges, World Bank officials remain optimistic about India’s potential. “India has strong foundations of macroeconomic stability, a demographic dividend, strong reform momentum, a large market, and strategic and political opportunities. All engines of growth will need to work faster,” Kruse remarked. Kouame pointed to lessons from countries like Chile, South Korea, and Poland, which successfully transitioned to high-income status. “Countries like Chile, Korea, and Poland have deepened their integration into the global economy to make this transition. India can chart its own path by stepping up the pace of reforms and building on its past achievements,” he said.
With its promising economic outlook, India has the opportunity to achieve high-income status by 2047. However, this will require sustained growth, inclusive policies, and transformative reforms across sectors. The World Bank’s report serves as a roadmap to guide India on this journey of progress and prosperity.
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