A new World Bank report, launched on February 28, 2025, outlines India’s roadmap to achieving high-income status by 2047. The report, titled “Becoming a High-Income Economy in a Generation,” states that India must grow at an average rate of 7.8% annually over the next 22 years to reach this milestone.
India’s Growth Performance & Future Projections
- Past Growth: India has grown at an average of 6.3% (2000-2024) and 7.2% in the past three fiscal years.
- Target Growth: To reach high-income status, India must sustain 7.8% growth (in real terms) through 2047.
Key Requirements for High-Income Transition
- Faster & Inclusive Growth across all states
- Increase Investment from 33.5% of GDP to 40% by 2035
- Increase Labor Force Participation from 56.4% to above 65%
- Boost Productivity Growth through reforms
Lessons from Other Countries
- Countries like Chile, Korea, and Poland transitioned successfully by deepening their global economic integration
- India’s growth strategy should focus on investment, labor force participation, and productivity
Four Critical Policy Actions for India’s Growth
- Increase Investment – More private and public investment (increasing the real investment rate from around 33.5 percent of GDP to 40 percent by 2035) will be fundamental to long-term growth.
- Create More & Better Jobs – Overall labor force participation rates have remained low in India (56.4 percent) compared to countries like Vietnam (73 percent) and Philippines (around 60 percent).
- Promote Structural Transformation – Currently the share of agriculture in employment is 45 percent. Allocation of land, labor and capital to more productive sectors, like manufacturing and services, can help raise firm and labor productivity.
- Enable Faster State-Level Growth – The report argues for a differentiated policy approach whereby less developed states could focus on strengthening the fundamentals of growth (health, education, infrastructure, etc.), while more developed states could prioritize the next generation of reforms (better business environment, deeper participation in GVCs, etc.).
(Source: World Bank)
