Key Takeaways
- India’s per capita income is projected to double to $4,418 by 2030-31, pushing it into the upper-middle-income bracket.
- The nation is set to become the world’s third-largest economy by 2028, overtaking Germany and Japan.
- Strong fundamentals, a young workforce, and key policy reforms are driving this historic economic ascent.
India is on a definitive path to become an upper-middle-income country by 2030-31 and the world’s third-largest economy by 2028, according to a new report from SBI Global Research. The nation’s per capita income is expected to nearly double, fueling this major economic milestone.
Projecting India’s Economic Leap
The report, titled ‘India’s Ascent to Upper-Middle Income Status: A Reality Check’, states that India’s per capita income will jump to $4,418 by 2030-31 from the current $2,500. This would place India within the World Bank’s definition of an upper-middle-income country, which requires a per capita income between $4,466 and $13,845.
“India’s per capita income is expected to double to $4,418 by 2030-31 from the current $2,500, making it an upper-middle-income country,” the report stated.
Becoming the Third-Largest Economy
Simultaneously, India’s overall economy is projected to grow at a compound annual growth rate (CAGR) of 8-10% in nominal terms. This robust growth will propel India to the position of the third-largest global economy by 2028, surpassing economic powerhouses Germany and Japan. Currently, India holds the fifth spot.
The report forecasts the economy to swell to $8 trillion by 2030-31, up from the current $3.6 trillion. This expansion will be powered by growth across manufacturing, services, and agriculture.
Drivers of Growth: Demographics and Digitalisation
India’s significant demographic advantage, with a median age of 28 years, is cited as a primary growth engine. Coupled with rapid digital adoption, this is expected to boost national productivity and efficiency.
India’s share of global GDP is also set to rise from 3.5% to 4.5% by 2028, supported by heavy investment in infrastructure and a digitally-enabled young workforce.
Role of Structural Reforms
The report credits major policy reforms for laying a strong foundation. Key initiatives like the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), and the Production Linked Incentive (PLI) scheme have improved the ease of doing business, attracted foreign investment, and helped formalise the economy.
“These reforms have improved the ease of doing business, increased tax compliance, and attracted foreign investment. They have also helped in formalising the economy and creating jobs,” the report added.
Sustainable Growth and the 2047 Vision
The SBI report concludes that India’s economic trajectory is on track, provided it continues to implement structural reforms and invest in human capital and infrastructure. The analysis presents a positive outlook for the long term.
“India’s economic growth story is robust and sustainable. With the right policies and investments, India can achieve its goal of becoming a developed country by 2047,” the report stated.
