According to SBI report, India can reach at par with China in terms of upper middle income group by 2030.Image Credit source: ChatGPT
The country is continuously progressing on the economic front and is surprising the whole world with its growth figures. Now the report that has come is even more surprising. There is a reason for that too. This time India is seen giving a direct challenge to China on a different front. According to the report, India can reach equal to China in terms of per capita income by the end of the current decade. In fact, this is being said in the case of upper middle income group.
The special thing is that at present the population of India has reached more than that of China. But the country’s economy and growth speed is the highest in the world. Where India’s growth in the current financial year has been estimated at 7.3 percent. On the other hand, China’s growth estimate is not even 5 percent. In the coming years also, China may have to struggle on the economic front. In such a situation, China will either remain stable in terms of per capita income or it will see a slight increase.
Whereas growth is expected to increase tremendously. India’s historical record of income growth has also been mentioned in the recent report. Let us also tell you whose report this is and what kind of estimates have been made regarding income growth.
SBI report surprised
According to a recent report by State Bank of India (SBI), India will join the upper middle income group like China and Indonesia by the end of this decade, which is a major change in the income profile of the country. SBI said that India’s per capita income will reach $ 4000 in the next four years i.e. by 2030 and will join the upper middle income group and come into the existing category along with China and Indonesia. India’s income growth has continued to accelerate over time. It took 60 years for the country to move from lower income group to lower-middle income group and achieved this feat in 2007. During this period, per capita gross national income increased from $90 in 1962 to $910 in 2007, a compound annual growth rate of 5.3 percent.
Earning will be $3000 by 2026
After this there was a sharp jump in the pace of growth. It took six decades for India to become a trillion dollar economy after independence, but in the next seven years (by 2014), it achieved the second trillion dollar, the third trillion dollar by 2021 and the fourth trillion dollar in just four years (by 2025). Given the current pace, the economy is expected to cross the $5 trillion mark in about two years. A similar trend is visible in per capita income also. India touched $1,000 per capita income in 2009, it is expected to double to $2,000 in the next 10 years (by 2019) and reach $3,000 by 2026.
What should be the speed by 2047?
India’s growth performance at the global level has also improved in the last decade. Its percentage ranking in the distribution of average real GDP growth among countries has increased from 92nd to 95th in 25 years, reflecting a rightward shift in India’s position in the upper echelons of the global development distribution. Talking about the future, if India aims to reach the current high income country level ($13,936) in per capita Gross National Income (GNI) by 2047 as per the vision of Developed India, then the per capita GNI will have to grow at a compound annual rate of 7.5 percent. ? This seems possible, as India’s per capita GNI is expected to grow at a compound annual rate of 8.3 percent between 2001 and 2024. However, the threshold for attaining the status of a high income country is also likely to increase. If this increases to about $18,000 by 2047, India’s per capita GNI will have to grow at an annual rate of about 8.9 percent over the next 23 years.
What is SBI’s formula?
Assuming average population growth of 0.6 per cent and an average deflation rate of about 2 per cent, in line with trends in China, Japan, the US, the UK and the euro area between 1992 and 2024, nominal GDP growth in dollar terms over the next two decades will be about 11.5 per cent. To maintain this momentum, India will have to continue reforms to achieve high growth rate.
Also, entry into the upper middle income group, whose per capita gross national income limit is about $4,500, appears possible. The nominal dollar GDP growth required for this is about 11.5 per cent, which India achieved before the pandemic during FY 2004-2020 and remains close to this during FY 2004-2025.
What does the World Bank report say?
The World Bank categorizes countries on the basis of per capita GNI (measured in US dollars) into four groups: lower income, lower middle income, upper middle income group and high income. This framework is widely used to assess long-term income growth in various economies. In 1990, of the 218 countries categorized by the World Bank, 51 were in the lower income group, 56 in the lower middle income group, 29 in the upper middle income group, and 39 in the high income group.
The latest data for 2024 shows significant growth in income levels. The number of lower middle income countries has reduced to 26, while the number of lower middle income countries has increased to 50. The number of upper middle-income economies has increased to 54, and the number of high-income countries has more than doubled to 87.