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India, currently classified as a lower-middle-income economy with a Gross National Income (GNI) per capita of USD 2,540 (2023), aspires to achieve high-income status by 2047, coinciding with the centenary of its independence. A recent World Bank report titled “Becoming a High-Income Economy in a Generation” outlines the necessary reforms, challenges, and growth scenarios India must navigate to meet this ambitious target.

Growth Imperatives and Economic Targets

To transition into a high-income economy, India must sustain an average real GDP growth rate of 7.8% annually until 2047, raising its GNI per capita nearly eightfold. Historically, India grew at 6.3% (2000–2024) and has become the world’s fifth-largest economy, doubling its global share to 3.4%. However, "business-as-usual" growth (6.6%) will fall short, and only accelerated reforms can enable a successful transition—something achieved by few countries like Chile and Poland.

Key Policy Areas for Reform

• Boosting Investment and Capital Formation:
  • Increase total investment from 33.5% to 40% of GDP by 2035 through public-private synergy.
  • Address infrastructure deficits, streamline land acquisition, and liberalize FDI norms.
  • Improve financial markets to support long-term infrastructure and SME financing.
• Enhancing Labor Force Participation:
  • Raise overall labor force participation from 56.4% to 65%.
  • Increase female workforce participation from 35.6% to 50% by addressing socio-economic barriers and improving childcare and safety infrastructure.
  • Target job-rich sectors like manufacturing, logistics, hospitality, and care economy to generate employment.
• Structural Transformation and Trade Integration:
  • Shift labor from agriculture (currently employing 45% of workforce) towards manufacturing and services.
  • Boost India's Global Value Chain (GVC) participation by reducing high tariffs and non-tariff barriers, particularly on intermediate and capital goods.
  • Simplify customs, improve regulatory clarity, and promote technological adoption across sectors.
• Promoting Balanced Regional Growth:
  • Support low-income states in developing healthcare, education, and infrastructure.
  • Deepen industrial reforms and trade competitiveness in developed states through federal programs like the Urban Challenge Fund.
• Strengthening Human Capital and Innovation:
  • Expand vocational training and R&D investments in emerging areas such as AI, biotechnology, and clean energy.
  • Encourage entrepreneurship and formalization to reduce the high informal employment rate (73%).

Challenges on the Path

India faces slowing investment rates (down from 35.8% in 2008 to 27.5% in 2024), low FDI inflows (just 1.6% of GDP), and declining trade openness (exports and imports fell from 56% of GDP in 2012 to 46% in 2023). Regulatory unpredictability and complex business processes hinder private investment.

Conclusion

India’s vision to become a high-income economy by 2047 is ambitious yet attainable, contingent on sustained growth, robust reforms, and inclusive development. Strategic policy execution in trade, labor, investment, and federal cooperation will be critical to transforming India's economic trajectory and positioning it as a global leader by its centenary year.