NEW DELHI: India can transition to the upper middle-income country by 2030 if the nominal GDP grows at 11.5% in dollar terms from now on, says a SBI Research report. As per its projections, India’s per capita gross national income (GNI) will grow to $4,276 -- which is closer to the current lower threshold of $4,496 for qualifying as higher medium income country -– if the nominal GDP grows at 8.3%, which is the average growth in the past 23 years.
“Growth of nominal GDP in dollar terms required to achieve this is around 11.5% which is achievable as this growth has been around 11% before the pandemic (FY04-FY20) and around 10% during FY04-FY25,” says the SBI report penned by Soumya Kanti Ghosh, group chief economic advisor, SBI.
As per World Bank definition, a country with per capita GNI of $4,496-$13,935 is categorised as a high middle-income country. Currently, India is categorized as a lower middle-income country.
The report further says if the current per capita GNI threshold for high income countries of $13,936 to be reached by 2047, India’s per capita GNI has to grow by a CAGR of 7.5%. “This seems achievable as India’s per capita GNI has grown by a CAGR of 8.3% during the last 23 years (2001-2024),” says the report.
However, according to it, the threshold level for high income countries will also get changed by then. If the threshold for high income countries gets changed to $18,000, then India’s per capita GNI needs to grow by a CAGR of around 8.9% in the next 23 years.
The report says that India’s growth journey in the last decade shows that India’s percentile rank in the cross-country distribution of average real GDP growth has increased from the 92nd percentile over a 25-year horizon to the 95th percentile implying a rightward shift in its relative position that places India deeper into the upper tail of the global growth distribution.
India took 60 years to transition to lower-middle income in 2007 from a low-income country. Its per capita GNI increased from $90 in 1962 to $910 in 2007, a CAGR of 5.3%.
India achieved $1,000 per capita income in 62 years since independence in 2009, $2,000 per capita in 2019, and it is likely to achieve $3,000 in 2026.