India’s Path to High-Income Status by 2047: World Bank Report Outlines Key Reforms

“India can chart its own unique growth path by leveraging past achievements and stepping up reforms,” said Auguste Tano Kouamé, World Bank Country Director for India.

A new World Bank report, Becoming a High-Income Economy in a Generation, released today, highlights that India must sustain an average growth rate of 7.8 percent over the next 22 years to achieve its goal of becoming a high-income country by 2047. The report affirms that while ambitious, this target is achievable if India implements necessary reforms at an equally ambitious pace.

Between 2000 and 2024, India’s economy grew at an impressive average rate of 6.3 percent. Recent economic momentum has further accelerated, with the country achieving an average growth rate of 7.2 percent over the past three fiscal years. Drawing lessons from countries like Chile, South Korea, and Poland, which successfully transitioned to high-income status through deeper global integration, the report emphasizes that India must accelerate reforms to sustain high growth.

“India can chart its own unique growth path by leveraging past achievements and stepping up reforms,” said Auguste Tano Kouamé, World Bank Country Director for India.

Scenarios for India’s Growth Trajectory

The report outlines three potential scenarios for India’s economic growth, with only one leading to high-income status by 2047. To achieve this milestone, India must:

1. Ensure faster and inclusive growth across all states.
2. Increase total investment from 33.5 percent of GDP to 40 percent by 2035.
3. Boost labor force participation from 56.4 percent to over 65 percent.
4. Accelerate overall productivity growth.

“India can leverage its demographic dividend by investing in human capital, fostering conditions for better jobs, and raising female labor force participation from 35.6 percent to 50 percent by 2047,” stated Emilia Skrok and Rangeet Ghosh, co-authors of the report.

Four Key Policy Actions for Sustainable Growth

To sustain long-term growth and reach the targeted 7.8 percent average annual expansion, the report recommends four crucial areas for policy action:

1. Increasing Investment

Investment—both public and private—must rise to sustain economic expansion. Key measures include:

• Strengthening financial sector regulations.
• Removing constraints on formal credit access for micro, small, and medium enterprises (MSMEs).
• Simplifying Foreign Direct Investment (FDI) policies.

2. Creating More and Better Jobs

India’s labor force participation remains low at 56.4 percent, significantly below Vietnam’s 73 percent and the Philippines’ 60 percent. To improve job creation, the report suggests:

• Incentivizing private sector investment in labor-intensive industries such as agro-processing, manufacturing, hospitality, transportation, and the care economy.
• Implementing strategies to boost skilled workforce development and access to finance.
• Strengthening an innovation-driven economic framework.

3. Promoting Structural Transformation, Trade, and Technology Adoption

With agriculture still employing 45 percent of India’s workforce, a structural shift toward manufacturing and services is necessary. Policy measures should focus on:

• Reallocating land, labor, and capital to more productive sectors.
• Strengthening infrastructure and adopting modern technology.
• Streamlining labor regulations and reducing compliance burdens on businesses.
• Enhancing India’s Global Value Chain (GVC) participation, catching up with Thailand, Vietnam, and China.

4. Enabling States to Grow Faster and More Equitably

The report calls for a differentiated policy approach to bridge regional disparities. Recommendations include:

• Less-developed states should prioritize fundamental growth drivers such as health, education, and infrastructure.
• More developed states should focus on next-generation reforms like improving the business climate and deeper global integration.
• The central government should facilitate growth through incentive-driven federal programs, such as the Urban Challenge Fund, to support lagging districts.
• Additional incentives and capacity-building efforts to help low-income states improve public expenditure efficiency and accelerate growth convergence.

Conclusion: A Roadmap to 2047

India stands at a critical juncture in its economic trajectory. While the nation has achieved remarkable growth over the past two decades, sustaining an average annual GDP growth of 7.8 percent over the next 22 years will require ambitious reforms. By increasing investments, creating more jobs, embracing structural transformation, and ensuring balanced regional development, India can successfully transition into a high-income economy by 2047, fulfilling its long-term aspirations.