India on track for upper middle-income economy status by 2036: Report

India's middle-class rise: India has the potential to evolve into an upper middle-income economy by the fiscal years 2033 to 2036, aiming to achieve a $15 trillion economy between fiscal years 2043 and 2047, according to India Ratings and Research. 

Economic growth scenario

The agency outlines various scenarios for India's economic growth, indicating that to reach a $5 trillion economy by FY30 with a per capita income of $3,467, the economy would need a real GDP growth rate of 6.25 per cent, GDP deflator growth of 3.5 per cent, and a 3.25 per cent INR/USD depreciation.

However, to accelerate the transformation to a $5 trillion economy by FY2029 with a per capita income of $3,530, the required real GDP growth per annum would have to be higher at 8 per cent.

Income category shift

Sunil Kumar Sinha, Senior Director & Principal Economist, India Ratings and Research, stressed that the trajectory of India's economy will be determined by the evolution of real GDP growth, inflation (GDP deflator), and the INR/USD exchange rate. India transitioned to a lower-middle-income country in 2007 and has remained in that category since then, with a per capita GDP of $2,390 in 2022. 

The agency highlights that to achieve upper-middle-income status, India's per capita income would need to range between $4,466 and $13,845.

India Ratings estimates that for India to reach a $30 trillion economy by FY2047, it would need to sustain an annual growth rate of 9.7 per cent in current USD terms from FY24 to FY47. However, historical data shows that sustaining such high growth rates over a decade is challenging. 

The agency also points out that while India's economy is experiencing robust growth, achieving a sustained 7 per cent real GDP growth without strong global demand or trade support is rare amongst major economies.

​Per capita projections

Regardless of whether India reaches the $30 trillion target by 2047, India Ratings predicts that per capita income will likely reach $9,218 to $9,920 between FY43 and FY47, bringing India closer to the threshold of a high-income country.

Another rating agency, Crisil, recently suggested that India could achieve upper-middle-income status by 2031, with the economy projected to double to $7 trillion and an expected growth rate of 6.8 per cent in the next fiscal year.