India must grow at an average rate of 7.8% per year to achieve the status of a high-income country by 2047, according to a new report by the World Bank. The report, titled 'Becoming a High-Income Economy in a Generation,' was released on Friday and highlights the key reforms India needs to implement to reach this ambitious goal.

The World Bank recognised India's strong economic growth, averaging 6.3% from 2000 to 2024. However, it warned that continuing with the current approach will not be enough to make India a high-income country.

India’s growth journey so far

The report noted that India's economic development over the past two decades has been remarkable. Since the year 2000, India’s economy has grown nearly four times and its GDP per capita has almost tripled. The country’s share in the global economy has also doubled, rising from 1.6% in 2000 to 3.4% in 2023.

India is currently the fifth-largest economy in the world. Along with economic progress, the country has seen a significant decline in extreme poverty and major improvements in essential infrastructure and public services.

Even with these achievements, India still faces major challenges in its journey to becoming a high-income country by 2047. The report emphasised that reaching this goal will require major policy reforms, particularly in the financial sector, labour market, and land regulations.

What India needs to do

The World Bank said that only an ‘accelerated reforms’ package will allow India to sustain a high growth rate of 7.8% over the next two decades.

"To meet this target, given the less conducive external environment, India would need to not only maintain ongoing initiatives but in fact expand and intensify reforms," the report said.

The report also highlighted how countries like Chile, South Korea, and Poland successfully transitioned from middle-income to high-income economies by increasing their integration into the global economy. India can learn from these examples to build its own growth strategy.

The Country Economic Memorandum, which is a detailed study conducted by the World Bank, evaluates three possible growth scenarios for India over the next 22 years. To achieve the highest growth path, India must focus on increasing investment, creating more jobs, and boosting female workforce participation.

"India can take advantage of its demographic dividend by investing in human capital, creating enabling conditions for more and better jobs, and raising female labour force participation rates from 35.6% to 50% by 2047," said Emilia Skrok and Rangeet Ghosh, the co-authors of the report.

Key areas for growth

The report suggests four important steps India must take to continue growing fast. First, the country needs to attract more investments, both from within India and from other countries, to improve areas like infrastructure, manufacturing, and technology. Second, more people should move from farming jobs to better-paying jobs in industries and services, which will help the economy grow. Third, India must create enough jobs for its young population so that everyone has work opportunities. Lastly, more women should join the workforce, as this will increase overall productivity and help the economy grow even stronger.

In recent years, India has introduced several reforms to boost manufacturing, infrastructure, and digital transformation. However, the World Bank believes that these efforts must intensify to achieve long-term success.

India’s path forward

World Bank India Country Director Auguste Tano Kouame emphasised that India must speed up its reform process while continuing to build on its past achievements.

"Building on these achievements, India has set the ambitious goal of becoming a high-income country by 2047," Kouame said. "India can chart its own path by stepping up the pace of reforms and building on its past achievements."

The Country Economic Memorandum is a detailed report that looks at how India’s economy and society have developed over the past 20 years. It also explains the challenges India faces today and suggests important steps the country should take to keep growing in a strong and stable way.

India has a good economic foundation, and with the right policies, it can achieve its goal of becoming a high-income country by 2047. However, to reach this target, India must maintain steady and high growth, create more job opportunities, and make important changes in key areas like finance, industry, and labour laws.

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