India’s Path to High-Income Economy by 2047: World Bank Report

India must reach an average growth rate of 7.8% annually to transition into a high-income economy by 2047, according to a World Bank report. Significant reforms in finance, land, and labor markets are essential. Past achievements provide a foundation, but accelerated actions and sustained growth are necessary to increase GNI per capita nearly eightfold.

A recent World Bank report indicates that India must implement substantial reforms to achieve an average growth rate of 7.8 percent annually, thereby becoming a high-income economy by 2047. This transformation requires enhancements in the financial, land, and labor markets, according to the India Country Memorandum titled “Becoming a High-Income Economy in a Generation.”

Historically, India has averaged a growth rate of 6.3 percent from 2000 to 2024, which lays a strong foundation for future aspirations. However, the ambitious target of a high-income economy by 2047 is unattainable through a business-as-usual approach. The gross national income (GNI) per capita must increase nearly eightfold, necessitating sustained acceleration in growth for the next two decades—a challenging feat not achieved by many nations.

The report emphasizes India’s need to build on recent structural reforms aimed at promoting global manufacturing, enhancing infrastructure, and leveraging digital advancements while maintaining macroeconomic stability. Achieving high-income status by 2047 demands an average growth rate of 7.8 percent in real terms, necessitating an immediate and intensified package of reforms.

Auguste Tano Kouame, World Bank India Country Director, highlights that India can learn from the experiences of countries like Chile, Korea, and Poland, which successfully transitioned from middle to high-income economies through deeper global economic integration. India’s economic development has been remarkable, with a near quadrupling of the economy since 2000 and a tripling of GDP per capita, concurrently reducing extreme poverty and enhancing service delivery and infrastructure.

Co-authors of the report, Emilia Skrok and Rangeet Ghosh, assert that India’s demographic potential can be harnessed through robust investments in human capital, improved labor market conditions, and raising female labor force participation from 35.6 percent to 50 percent by 2047. With India maintaining a growth rate of 7.2 percent over the last three fiscal years, further acceleration to reach the needed average of 7.8 percent in the coming decades is critical.

Four key areas of policy action are proposed: increasing investment, improving structural transformation, creating jobs, and enhancing agricultural productivity. Additionally, the report stresses the importance of easing land access, labor mobility, and advancing infrastructure for human capital development. It advocates incentives for private investments in job-rich sectors to maximize the potential of India’s demographic dividend.

Strengthening infrastructure, embracing modern technology, and streamlining labor market regulations are essential for driving productivity. These reforms will enhance India’s competitiveness and facilitate participation in Global Value Chains (GVCs) alongside peers like Thailand, Vietnam, and China. The report underscores that financial sector regulations must be strengthened to enhance credit access for small and medium enterprises (SMEs), alongside reforms in foreign direct investment policies.

In conclusion, to realize its goal of becoming a high-income economy by 2047, India must adopt a comprehensive reform strategy focused on sustaining high growth rates, increasing GNI per capita, and enhancing labor market participation. This requires dedication to structural transformation, investment in human capital, and improvements in infrastructure to harness the full potential of its demographic dividend.

Original Source: www.ndtv.com