World Bank Report: India May Take 75 Years to Reach a Quarter of US Per Capita Income

August 3, 2024

New Delhi, India

A recent World Bank report paints a challenging picture for India and other middle-income countries striving for economic prosperity. According to the World Development Report 2024: The Middle Income Trap, it could take India nearly 75 years to reach just one-quarter of the US per capita income. This forecast underscores the substantial obstacles these countries face in becoming high-income nations.

Key Insights from the World Development Report 2024:

1. China and Indonesia Projections:
   • China is projected to take over 10 years to reach one-quarter of the US per capita income.
   • Indonesia might take nearly 70 years to achieve the same milestone.
2. The Middle Income Trap:
   • The report identifies a “trap” that countries typically hit at around 10% of the annual US GDP per capita, roughly $8,000 today.
   • As of the end of 2023, 108 countries were classified as middle-income, with GDP per capita ranging from $1,136 to $13,845. These nations are home to six billion people, making up 75% of the global population and two-thirds of those living in extreme poverty.
3. Future Challenges:
   • Middle-income countries face greater challenges ahead, including rapidly aging populations, increasing debt, geopolitical and trade conflicts, and the difficulty of accelerating economic progress without environmental degradation.
4. Outdated Strategies:
   • The report criticizes many middle-income countries for relying on outdated strategies focused primarily on expanding investment. This approach is likened to “driving a car in first gear and expecting it to go faster.”

Statements from World Bank Officials:

• Indermit Gill, Chief Economist of the World Bank Group:
  • Gill emphasized that if developing countries continue with outdated strategies, most will fail to create reasonably prosperous societies by the mid-21st century.
  • He highlighted that the global battle for economic prosperity will be largely determined in middle-income countries.

Strategies for Achieving High-Income Status: The report proposes a strategy for countries to transition to high-income status, recommending a sequenced and progressively sophisticated mix of policies based on their development stage. Since 1990, only 34 middle-income economies have managed to shift to high-income status, with more than a third benefiting from European Union integration or previously undiscovered oil resources.

Conclusion: The World Development Report 2024 highlights the significant challenges facing middle-income countries like India. With projections indicating a long road ahead, these nations must adopt more sophisticated and modern strategies to achieve high-income status and ensure sustainable economic growth.