India must Grow 7.8% Annually for 22 Years to Reach High Income by 2047
ECONOMY & POLICY

India must Grow 7.8% Annually for 22 Years to Reach High Income by 2047

India must sustain an average growth rate of 7.8 per cent over the next 22 years to achieve high-income status by 2047, according to a World Bank report. Under a "business as usual" scenario, the country is expected to experience significant economic gains but may fall short of this goal.

The report, titled *Becoming a High-Income Economy in a Generation*, emphasises that achieving this target requires accelerated reforms. Over the past three financial years, India’s growth rate has averaged 7.2 per cent. To maintain and further increase this pace, the World Bank’s Country Economic Memorandum outlines four key policy actions.

One of the critical areas identified is raising the investment-to-GDP ratio to 40 per cent by 2035, driven equally by ICT and physical capital. This objective can be met through strengthened financial sector regulations, improved credit access for MSMEs, and streamlined FDI policies.

Another crucial factor is increasing women's workforce participation to 55 per cent by 2050. This can be facilitated by encouraging private sector investments in labour-intensive industries such as agro-processing, manufacturing, hospitality, transportation, and the care economy. Additionally, expanding the skilled workforce, improving financial access, and fostering innovation are essential for economic transformation.

The report highlights that optimizing the allocation of land, labour, and capital towards more productive sectors like manufacturing and services can enhance firm and labour productivity, enabling states to achieve faster and more balanced growth.

Under a "business as usual" scenario, growth is projected to average 6.6 per cent annually, with investment reaching 37 per cent of GDP by 2035 and female workforce participation rising to 45 per cent by 2045. However, if reform efforts slow further, growth could drop below 6 per cent, significantly reducing the likelihood of attaining high-income status by 2047.

News source: Business Standard

India must sustain an average growth rate of 7.8 per cent over the next 22 years to achieve high-income status by 2047, according to a World Bank report. Under a business as usual scenario, the country is expected to experience significant economic gains but may fall short of this goal. The report, titled *Becoming a High-Income Economy in a Generation*, emphasises that achieving this target requires accelerated reforms. Over the past three financial years, India’s growth rate has averaged 7.2 per cent. To maintain and further increase this pace, the World Bank’s Country Economic Memorandum outlines four key policy actions. One of the critical areas identified is raising the investment-to-GDP ratio to 40 per cent by 2035, driven equally by ICT and physical capital. This objective can be met through strengthened financial sector regulations, improved credit access for MSMEs, and streamlined FDI policies. Another crucial factor is increasing women's workforce participation to 55 per cent by 2050. This can be facilitated by encouraging private sector investments in labour-intensive industries such as agro-processing, manufacturing, hospitality, transportation, and the care economy. Additionally, expanding the skilled workforce, improving financial access, and fostering innovation are essential for economic transformation. The report highlights that optimizing the allocation of land, labour, and capital towards more productive sectors like manufacturing and services can enhance firm and labour productivity, enabling states to achieve faster and more balanced growth. Under a business as usual scenario, growth is projected to average 6.6 per cent annually, with investment reaching 37 per cent of GDP by 2035 and female workforce participation rising to 45 per cent by 2045. However, if reform efforts slow further, growth could drop below 6 per cent, significantly reducing the likelihood of attaining high-income status by 2047. News source: Business Standard

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