India on Track to an Upper-Middle-Income Nation

India is moving steadily towards a major economic milestone. According to a recent analysis by the State Bank of India, the country is expected to enter the upper-middle-income category by the end of this decade. Rising per capita income, strong GDP growth and structural reforms are placing India among the world’s fastest-growing large economies.

Why in News?

A report by State Bank of India projects India’s per capita income to reach $4,000 by 2030. This would shift India into the upper-middle-income category under World Bank classifications.

About Upper Middle Income

• The World Bank classifies countries based on per capita Gross National Income (GNI).
• Economies are grouped as low income, lower-middle income, upper-middle income and high income.
• The current threshold for the upper-middle-income group is around $4,000-4,500 per capita GNI.
• Once India crosses this level, it will join countries like China and Indonesia, reflecting higher living standards and stronger economic capacity.

India’s Income Journey Since 1990

• India’s transition has been gradual but steady. In 1962, India’s per capita GNI was about $90.
• It took nearly six decades to move into the lower-middle-income category in 2007, when GNI reached around $910.
• Since then, income growth has accelerated.
• Per capita income crossed $1,000 in 2009, doubled to $2,000 by 2019, and is expected to reach $3,000 in 2026, showing a clear upward trajectory.

India’s Rising Global Economic Position

• India is also set to become the world’s third-largest economy by 2028, overtaking Germany, after the United States and China.
• The country crossed the $4 trillion GDP mark by 2025 and is projected to reach $5 trillion within the next two years.
• This rapid expansion highlights India’s improving global economic standing and growing influence in international markets.

What Is Driving India’s Growth?

• Several factors are supporting India’s economic rise. These include sustained GDP growth above 7%, a strong domestic market, digitalization, infrastructure expansion and policy reforms.
• According to SBI, India’s per capita GNI has grown at a CAGR of over 8% during 2001-2024, placing it among the top performers globally. Improved productivity and investment flows have also contributed to this momentum.

Key Summary at a Glance

Question

Q. According to World Bank classification, countries are grouped based on which indicator?

A. GDP growth rate
B. Per capita Gross National Income
C. Inflation rate
D. Fiscal deficit