India Needs 7.8% Growth to Become a High-Income Nation by 2047: World Bank

Highlights from the World Bank Report

India must sustain an average GDP growth rate of 7.8% over the next 22 years to achieve its vision of becoming a high-income economy by 2047, according to the World Bank’s India Country Economic Memorandum.

While India’s economic trajectory is strong, the report emphasizes that comprehensive and sustained reforms will be crucial in realizing this ambitious goal.

Growth Targets & Economic Outlook

• India’s GDP grew 6.3% in Q3 FY24, up from 5.4% in the previous quarter, aided by rural recovery and capital expenditure.
• Sustained 7.8% growth does not need to be met annually—variations are expected due to domestic and global economic conditions.
• India should focus on domestic growth drivers rather than over-relying on global trends, said World Bank Country Director for India Auguste Tano Kouame.

Investment, Jobs, and Fiscal Policy

• Private investment remains weak, despite favorable conditions, raising concerns over long-term growth.
• Investment-to-GDP ratio must rise from 33.5% to 40% by 2035 to sustain high growth.
• Labour force participation (currently 56.4%) needs to exceed 65% by 2047, with a focus on increasing women’s participation from 35.6% to 50%.
• Gradual fiscal consolidation is preferred over aggressive measures, ensuring continued welfare spending and economic stability.

Structural Reforms & Productivity Boost

• India’s structural transformation has been slow, with 45% of employment still in agriculture.
• Key recommendations for higher productivity:
  • Shift resources to higher-value sectors like manufacturing and services.
  • Improve infrastructure and streamline labour laws.
  • Reduce compliance burdens on businesses to enhance competitiveness.
  • Encourage innovation, digitalization, and better capital allocation.

State-Level Growth & Federal Reforms

• States should follow differentiated growth strategies:
  • Less-developed states: Focus on health, education, and infrastructure.
  • More developed states: Deepen global trade integration and business-friendly reforms.
• Centre’s role: Drive state-level growth through incentive-driven federal programs, such as the Urban Challenge Fund.

Lessons from Other High-Income Nations

The report highlights case studies from Chile, Korea, and Poland, which successfully transitioned to high-income status by:

• Deepening integration into global supply chains.
• Fostering innovation and entrepreneurship.
• Maintaining macroeconomic stability while pushing long-term reforms.

Final Outlook

While challenges remain, the World Bank remains optimistic about India’s ability to achieve high-income status by 2047, citing:

• Strong macroeconomic stability.
• Favorable demographics (young workforce).
• Proactive reform momentum.
• Expanding domestic market & strategic global positioning.

Bottom Line

Achieving a high-income economy by 2047 requires faster reforms, higher investment, job creation, and state-level economic development. With the right policy mix and continued momentum, India has the potential to successfully transition into a global economic powerhouse.