India needs 7.8% growth to achieve high-income status by 2047: WB

India will need to grow by 7.8 per cent on average over the next 22 years to achieve the country’s aspirations of reaching high-income status by 2047, as per a new World Bank (WB) report.

The new India Country Economic Memorandum titled ‘Becoming a High-Income Economy in a Generation,’ finds that this target is possible. Recognising India’s fast pace of growth averaging 6.3 per cent between 2000 and 2024, the report notes that India’s past achievements provide the foundation for its future ambitions. Getting there however would require reforms and their implementation to be as ambitious as the target itself.

“Lessons from countries like Chile, Korea and Poland show how they have successfully made the transition from middle- to high-income countries by deepening their integration into the global economy,” said Auguste Tano Kouamé, World Bank country director. “India can chart its own path by stepping up the pace of reforms and building on its past achievements.”

To achieve high-income status by 2047, India needs to grow at 7.8 per cent annually over the next 22 years, according to the World Bank (WB).
The India Country Economic Memorandum recommends four key actions: increasing investment to 40 per cent of GDP, fostering job creation, promoting structural transformation, and enabling state-specific growth.

The report evaluates three scenarios for India’s growth trajectory over the next 22 years. The scenario which enables India to reach high-income status in a generation, requires India to: a) achieving faster and inclusive growth across states; b) increasing total investment from current 33.5 per cent of GDP to 40 per cent (both in real terms) by 2035; c) increasing overall labour force participation from 56.4 per cent to above 65 per cent; and d) accelerating overall productivity growth.

“India can take advantage of its demographic dividend by investing in human capital, creating enabling conditions for more and better jobs and raising female labour force participation rates from 35.6 per cent to 50 per cent by 2047,” said Emilia Skrok and Rangeet Ghosh, co-authors of the report.

To sustain India’s economic growth and achieve an average rate of 7.8 per cent over the next two decades, the Country Economic Memorandum recommends four critical policy actions. First is to increase investment by raising the real investment rate from 33.5 per cent to 40 per cent of GDP by 2035, with a focus on strengthening financial regulations, improving MSME credit access, and simplifying FDI policies. Second is fostering job creation by incentivising investment in job-rich sectors like agro-processing and manufacturing, while developing a skilled workforce and promoting innovation.

Third is promoting structural transformation by shifting labour from agriculture to more productive sectors like manufacturing and services, and enhancing productivity through infrastructure, technology adoption, and labour market reforms. Finally, enabling states to grow faster through a differentiated policy approach, where less developed states focus on health, education, and infrastructure, while more developed states work on improving business environments and deeper GVC participation. Incentive-driven federal programmes will support lagging states in improving efficiency and boosting overall growth. These actions aim to drive long-term, inclusive growth across the nation.

Fibre2Fashion News Desk (RR)

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