India to become upper-middle income economy by 2036: Ind-Ra

New Delhi: The Indian economy is likely to transition to an upper-middle income country, with per capita income of $4466, between the financial years 2033 and 2036, India Ratings and Research (Ind-Ra) said Monday.

Until 2006, the World Bank classified India as a low-income country. In 2007, India moved to the lower-middle income country and since then has remained there. India’s per capita GDP stood at $2,390 in 2022. A country with per capita income in the range of $4,466 to $13,845 is categorised as upper-middle income economy.

According to the rating agency, the size of the Indian economy is likely to reach $15 trillion by 2047, which is around half of the government’s projections. Finance Minister Nirmala Sitharaman recently said that achieving a $30 trillion economy by 2047 is a “conservative” estimate.

In order to achieve the $30 trillion target, Ind-Ra said the Indian economy will have to grow at 9.7 per cent per annum between now till 2047 in the current dollar terms.

In the past 50 years, there have been only two instances when the economy grew higher than 9.7 per cent per annum in current dollar terms for a period of 10 years: 1973-1982 and 2003-2012. “Cross country experience of 50 years suggests that it is difficult to maintain and sustain such a high rate of real GDP growth in USD terms as the economy starts maturing,” said Sunil Kumar Sinha, senior director and principal economist at Ind-Ra.

“We expect the Indian economy under different scenarios to enter into the upper-middle income category over FY33–FY36 and to a $15 trillion economy over FY43-FY47,” Sinha added.

Rating agency CRISIL had also recently predicted that India would become an upper middle income economy by 2031 with the size of the economy crossing $7 trillion.

On the future growth projections, Sinha noted: “the Indian economy is showing robust growth, but cross-country experience also shows that no major economy has been able to grow 7 per cent (real) per annum on a sustained basis without the support of global demand/trade.”

“The target of reaching $30 trillion by 2047 would be not easy and a lot would depend on how the global and domestic macroeconomic environment unfolds from here on,” the rating agency noted.

However, irrespective of whether India attains the $30 trillion target by 2047 or not, Ind-Ra estimates of per capita income reaching $9,218 to $9,920 over FY43-FY47 means India would be much closer to the high-income country’s threshold of $13,846 per capita.