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The World Bank Group Country Income Classifications for Fiscal Year 2027 (released in July 2026) retained India in the Lower-Middle-Income category, a position it has held since 2009. In contrast, Sri Lanka, Vietnam and the Philippines were upgraded to the Upper-Middle-Income category.

What is the World Bank Country Income Classification?

The World Bank classifies economies every year on 1 July into four income groups based on their Gross National Income (GNI) per capita of the previous calendar year. The classification serves as an operational and analytical tool for development financing and cross-country comparison rather than a measure of overall development.

To improve comparability, GNI per capita is calculated using the Atlas Method, which smoothens the effects of exchange-rate fluctuations and inflation by averaging exchange rates over time. The income thresholds are revised annually using the Special Drawing Rights (SDR) deflator to account for global inflation.

Income Classification (FY 2027)

• Low Income: USD 1,175 or less
• Lower-Middle Income: USD 1,176–4,635
• Upper-Middle Income: USD 4,636–14,375
• High Income: Above USD 14,375

India's GNI per capita stood at USD 2,760 (2025), keeping it within the Lower-Middle-Income category.

Key Highlights

The latest classification reflects continued improvements in the global income landscape. While nearly 30% of economies were classified as low income in 1987, the share has declined to 11% by 2026.

This year, Sri Lanka, Vietnam, the Philippines, Jordan and Micronesia moved from the Lower-Middle-Income to the Upper-Middle-Income category, while Togo graduated from Low Income to Lower-Middle Income.

Vietnam and the Philippines achieved the upgrade through sustained export-led industrial growth, while Sri Lanka recovered from its recent economic crisis through the revival of tourism and financial services. Jordan and Togo benefited largely from revised statistical methodologies and updated national accounts.

Why Does India Continue to Remain a Lower-Middle-Income Economy?

Despite being one of the world's fastest-growing major economies, India's per capita income remains relatively low because of its large population, which dilutes gains in aggregate national income.

Significant regional disparities also persist. High-income States such as Tamil Nadu, Maharashtra and Gujarat coexist with relatively poorer States like Bihar and Uttar Pradesh, lowering the national average.

Another structural challenge is the dominance of the informal sector, where nearly 85% of the workforce is employed. Low labour productivity, disguised unemployment in agriculture and limited formal employment constrain growth in average incomes.

India also entered the Lower-Middle-Income category only in 2009. Historically, moving into the next income bracket requires sustained high economic growth over several decades.