India to become `upper-middle income` country in next 4 years: SBI Research report
SBI Research report has said India is set to touch $4,000 per capita income level, transitioning to 'upper-middle income' country, in next four years to 2030. Based on current classification, this will lead to India joining the ranks of China and Indonesia. The World Bank classifies nations as low income, lower-middle income, upper-middle income and high-income countries based on their per capita GNI (Gross National Income) in US dollar. Highlighting the country’s past journey, the report noted that it took 60 years for India to transition from low-income country to lower-middle income in 2007. It added that the country’s per capita GNI grew 5.3% annually during 1962 to 2007 from $90 to $910, respectively. India achieved $1,000 per capita income in 62 years since Independence in 2009, $2,000 per capita in next 10 years in 2019, and took another 7 years to achieve $3,000 per capita mark.
Moreover, the report said that the country will become the third largest economy even earlier in 2028. It pointed that India took 60 years since Independence to reach $1 trillion, $2 trillion in another 7 years in 2014, $3 trillion in 2021, and $4 trillion in another 4 years in 2025. Further, India is expected to reach $5 trillion mark in another about 2 years. Besides, the report noted that Viksit Bharat vision of becoming a high-income country of $13,936 per capita GNI by 2047, seems achievable as country per capita GNI has grown by a CAGR of 8.3% during the last 23 years (2001-2024). However, it added that the threshold level for high income country will also get changed by then. The report argued that if the threshold for high income country gets changed to $18,000 then the country’s per capita GNI needs to grow at a CAGR of around 8.9% in the next 23 years to achieve Viksit Bharat vision.
The report emphasized on continued reform agenda in order to clock get higher incremental growth required to reach the high-income bracket. Besides, even if the threshold for upper-middle income country rises to around $4,500, it noted that the country can and will transition to the upper-middle income country given by the country’s nominal GDP has been growing around 11% in dollar terms before the pandemic (FY04-FY20) and around 10% during FY04-FY25. The required nominal GDP growth to achieve $4,500 per capita income is around 11.5%. The report indicated that the US remains the biggest economy followed by China, with India transitioning to become the third largest economy beating Germany by 2028. It said that India is likely to become a $5 trillion economy by 2027/FY28 and $10 trillion by 2035/FY36.
