‘BECOMING A HIGH-INCOME ECONOMY IN A GENERATION’ REPORT RELEASED BY WORLD BANK

GS3 ECONOMICS:

The report recognizes that India needs to grow by 7.8% on average over the next 22 years to become High-Income Country (HIC) by 2047.

• India became a Low Middle-Income Country (LMIC) in 2007-08 and is currently on track to become an Upper Middle-Income Country (UMIC) by 2032.

Key Challenges In Becoming HIC By 2047

• Slow Structural Transformation: Agriculture still employs 45% of the workforce (2023-24) while traditional market services and construction (low productivity) together constitute nearly 30%.
  • In contrast, the share of manufacturing in total employment was around 11% and modern market services accounted for only 7%.
• Declining Private Investment: Private investment surged post-1990s reforms but it has fallen as a share of GDP, particularly since the global financial crisis in 2008.
• Underutilisation of Demographic Dividend: Over 2000-19, the working-age population increased by 37.4%, but employment increased by only 15.7%.
  • During this period, the labor force participation rate fell from 58% to 49% remaining low by middle-income countries standards.

Key Strategies for Growth

• Boost Investment: Increase investment from 33.5% to 40% of GDP by 2035 through better financial regulations, easier MSME credit, and simplified FDI policies.
• Create Jobs: Encourage private investment in job-rich sectors like agro-processing, manufacturing, transport, and care economy.
• Balanced Regional Growth: Less developed states focus on basics (health, education, infrastructure), while developed states advance Next-generation reforms.