February 28th 2025.
According to a recent report by the World Bank, India has set its sights on becoming a high-income country by the year 2047. In order to achieve this ambitious goal, the country will need to maintain an average growth rate of 7.8% over the next 26 years. The report, titled 'Becoming a High-Income Economy in a Generation,' highlights the need for reforms in the financial sector, as well as the land and labour markets.
The World Bank acknowledges India's impressive growth rate, which has averaged 6.3% between 2000 and 2024. This growth, along with the country's past achievements, serves as a strong foundation for its future ambitions. However, the report also emphasizes that reaching the target of becoming a high-income economy by 2047 will not be possible without significant changes. In fact, India's GNI per capita would need to increase by almost 8 times its current level in order to reach this goal.
To meet this target, the World Bank suggests that India will not only need to maintain its ongoing initiatives, but also expand and intensify its reforms. This is especially important given the current external environment, which is less conducive to growth. The report stresses the need for an 'accelerated reforms' package in order to put India on track to becoming a high-income economy.
In recent years, India has already taken steps towards achieving its goal by implementing structural reforms to transform the country into a global manufacturing hub, improve infrastructure, and invest in human capital. The report emphasizes that these efforts must continue and be intensified in order for India to reach high-income status by 2047.
According to the report, achieving an average growth rate of 7.8% over the next two decades will require an 'accelerated reforms' package. This would put India on par with countries like Chile, Korea, and Poland, which have successfully made the transition from middle to high-income status by deepening their integration into the global economy.
The report also highlights India's remarkable development story over the past few decades, with the economy growing nearly fourfold in real terms and GDP per capita almost tripling. Not only has poverty decreased significantly, but there has also been significant improvement in service delivery and infrastructure. India's share in the global economy has also doubled, making it the world's fifth largest economy.
The report acknowledges that India can continue on its path of success by building on its past achievements and stepping up the pace of reforms. It evaluates three possible scenarios for India's growth trajectory over the next 22 years, with a focus on investing in human capital, creating more and better jobs, and increasing female labour force participation.
Despite challenges and uncertainties, India has managed to accelerate its average growth rate to 7.2% in the past three fiscal years. In order to maintain this growth and reach an average of 7.8% over the next two decades, the report recommends four critical areas for policy action, including increasing investment, promoting structural transformation, and creating more jobs.
The Country Economic Memorandum, which is a flagship analytical report by the World Bank, reviews the economic and social developments in India over the past 20 years. It also outlines the current challenges and recommends reforms necessary for sustainable and inclusive long-term growth. With India's aspiration to become a high-income economy by 2047, these reforms are crucial for the country's future success.
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