India’s Per Capita Income May Reach 1/4th of US Level in 75 Years: World Bank

India faces significant challenges in achieving high-income status in the coming decades, according to a report by the World Bank. The report indicates that over 100 countries, including India, confront formidable barriers to reaching high-income status in the near future. It is projected that New Delhi may require approximately 75 years to attain a per capita income equal to one-quarter of that of the United States.

Similarly, the report estimates that China will take more than 10 years to reach one-quarter of US income per capita, while Indonesia may need close to 70 years to achieve the same level. The World Development Report 2024: The Middle Income Trap highlights the trend that as countries become wealthier, they often encounter a “trap” at around 10% of the annual US GDP per person, which is approximately USD 8,000 today. This falls within the middle-income range as classified by the World Bank.

As of the end of 2023, 108 countries were categorized as middle-income, collectively representing 75% of the global population. These countries are home to two-thirds of people living in extreme poverty. The report also points out that the challenges ahead, such as rapidly aging populations, increasing debt, geopolitical and trade tensions, and the difficulty of advancing economically while minimizing environmental damage, are more daunting than those experienced in the past.

According to Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics, if developing countries follow the old strategies, they are likely to fall behind in creating prosperous societies by the middle of the century. The report suggests that the battle for global economic prosperity will be determined largely in middle-income countries. It proposes a strategy for countries to achieve high-income status, emphasizing the need for a sequenced and progressively more sophisticated mix of policies based on their stage of economic development.

The report also highlights that, since 1990, only 34 middle-income economies have successfully transitioned to high-income status, with over a third of them benefiting from integration into the European Union or from the discovery of previously untapped oil resources.