World Bank Report: India Needs 7.8 Per Cent Average Annual Growth For Next 22 Years To Achieve High-Income Status By 2047

India should sustain an average annual growth rate of 7.8 per cent over the next 22 years to transition into a high-income economy by 2047, according to a World Bank report released on 28 February, reported The Hindu.

While the goal is achievable, the report emphasises that bold reforms and their effective implementation will be crucial in realising this ambition.

The report, titled "India-Country Economic Memorandum: Becoming a High-Income Economy in a Generation," acknowledges India’s impressive economic trajectory, with an average growth rate of 6.3 per cent between 2000 and 2024. 

It highlights how other nations like Chile, South Korea, and Poland successfully made the transition from middle-income to high-income status by deepening their integration with the global economy.

"India can chart its own path by stepping up the pace of reforms and building on its past achievements," Auguste Tano Kouame, World Bank Country Director for India, was quoted as saying by The Hindu.

As per the report, the scenario which enables India to reach high-income status in a generation, requires:

a) Achieving faster and inclusive growth across states;

b) Increasing total investment from current 33.5 per cent of GDP to 40 per cent (both in real terms) by 2035;

c) Increasing overall labour force participation from 56.4% to above 65%; and,

d) accelerating overall productivity growth.

Emilia Skrok and Rangeet Ghosh, co-authors of the report, said that India can take advantage of its demographic dividend by investing in human capital, creating enabling conditions for more and better jobs and raising female labour force participation rates from 35.6 per cent to 50 per cent by 2047.

According to the report, over the last three fiscal years, India’s growth rate has accelerated to 7.2 per cent, but sustaining this momentum requires structural reforms in four key areas:

• Scaling Up Investments: Private and public investment should increase from 33.5 per cent of GDP to 40 per cent by 2035.

• Creating More and Better Jobs: India’s labour force participation rate (56.4 per cent) remains low compared to Vietnam (73 per cent) and the Philippines (60 per cent). Policy measures should incentivise private sector to invest in job-rich sectors like agro-processing, hospitality, transportation, and the care economy.
  

• Transforming Industry and Trade: With 45 per cent of India's workforce still in agriculture, shifting resources toward higher productivity sectors like manufacturing and services can help India catch up with Thailand, Vietnam, and China in GVC participation.

• Ensuring Balanced State-Level Growth: Less developed states should focus on strengthening the fundamentals of growth (health, education, infrastructure, etc.), while more developed states could prioritise the next generation of reforms (better business environment, deeper participation in GVCs, etc.).

Also Read: India’s GDP Grows 6.2 Per Cent In Q3; FY 2024-25 Growth Pegged At 6.5 Per Cent Amid Manufacturing, Mining Slump