India’s Per Capita Income May Take 75 Years to Reach 1/4th of US Levels: World Bank

Over 100 nations, including India, confront significant barriers in achieving affluence in the approaching decades, with New Delhi potentially requiring close to 75 years to reach one-fourth of US income per person, according to a report by the World Bank.

China is projected to take more than a decade to reach one-fourth of US income per person, while Indonesia may take about 70 years, as outlined in the World Development Report 2024: The Middle Income Trap.

Referencing the experiences of the last half-century, the report concludes that as countries become wealthier, they often reach a “trap” at approximately 10 percent of annual US GDP per individual – around USD 8,000 today. This falls within the middle range of what the World Bank categorizes as middle-income nations.

By the conclusion of 2023, 108 nations were classified as middle-income, each with annual GDP per person ranging from USD 1,136 to USD 13,845. These nations are home to six billion individuals – accounting for 75 percent of the global populace – with two out of every three people living in severe poverty.

The future path presents even greater challenges than those encountered in the past: rapidly aging populations, mounting debt, intense geopolitical and trade tensions, and the escalating difficulty of accelerating economic advancement without harming the environment, the report suggests.

“Nevertheless, numerous middle-income countries are still following outdated strategies from previous eras, predominantly focusing on policies aimed at expanding investment.

This is akin to driving a vehicle solely in first gear and attempting to increase its speed,” the report states.

If these countries persist with outdated approaches, most developing nations will fall behind in the race to establish reasonably prosperous societies by the middle of this century, according to Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics.

“At the current pace, China will require over 10 years to reach one-fourth of US income per person, while Indonesia will need nearly 70 years, and India 75 years,” the report notes.

Gill also emphasizes that the competition for global economic prosperity will predominantly unfold in middle-income countries.

The report outlines a plan for nations to achieve affluent status. Irrespective of their developmental stage, all countries must adopt a well-organized and increasingly sophisticated blend of policies. Since 1990, only 34 middle-income economies have successfully transitioned to affluent status – with more than a third of them benefiting from integration into the European Union or from previously untapped oil resources, as per the World Bank.