India Likely to Enter Upper Middle Income Bracket by FY 2033–2036: India Ratings and Research

The outlook for India’s economy is bright and positive. India Ratings and Research (Ind-Ra) recently released a report predicting that by FY 2033–2036, India may move into the upper-middle income bracket. This is an intriguing concept that represents a big step forward, but what does it really imply and is it realistic?

“The onward journey of the Indian economy from India Ratings and Research (Ind-Ra) estimated USD 3.6 trillion dollars in FY24 will depend on the rate at which the real GDP growth, inflation (GDP deflator) and INR/USD exchange rate evolve. We expect the Indian economy under different scenarios to enter into the upper-middle income category (per capita income USD 4,466-13,845) over FY33–FY36 and to a USD 15 trillion economy over FY43-FY47”, says Dr Sunil Kumar Sinha, Senior Director and Principal Economist.

Ind-Ra assesses that the Indian economy will have to grow at 9.7% per annum over FY24-FY47 in the current USD terms to reach USD 30 trillion by FY47. There have only been two occasions in the last 50 years when the GDP increased at a rate faster than 9.7% annually in US dollars for ten years: 1973–1982 and 2003–2012.

Nevertheless, Ind-Ra predictions of per capita income hitting USD 9,218 to USD 9,920 between FY43-FY47 suggest India will be significantly closer to the high-income country’s criterion of USD 13,846 per capita, regardless of whether India meets the USD 30 trillion target by 2047 or not.

The Road to Transformation

Ind-Ra outlines various scenarios for achieving this goal. This growth hinges on several factors:

• Increased Private Investment: Encouraging investments in emerging sectors like renewable energy and technology will be crucial.
• Government Spending on Infrastructure: Continued focus on building roads, bridges, and digital connectivity will improve overall economic efficiency.
• Ongoing Reforms: Streamlining bureaucratic processes and regulations will attract further investment and boost productivity.
• Digitalisation and Efficiency: Leveraging technology to improve government services and business operations can unlock significant economic potential.

Beyond the Numbers

While achieving upper-middle-income status is a significant milestone, it’s just one step in India’s economic journey. The ultimate goal is to become a high-income economy, which requires surpassing the $13,846 GNI per capita threshold. Ind-Ra even predicts India will reach a $15 trillion economy by FY 2043-47, placing it among the global giants.

Conclusion

India’s economic future is bright. The potential to reach upper-middle-income status within the next decade is a testament to the country’s economic prowess. However, achieving this and pushing further requires continued government reforms, strategic investments, and a focus on inclusive growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.