India to enter upper-middle income status by mid-2030s: Ind-Ra

13 Mar '24

2 min read

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India is on track to become an upper-middle-income country by the mid-2030s and targets a $30 trillion economy by 2047, according to Ind-Ra's principal economist.
Challenges include global trade restrictions and the need for sustainable growth.
The country's commitments to energy transition and the expanding middle class are key to achieving these goals.

India is on track to ascend into the upper-middle income category between financial years 2033 (FY33) and 2036 (FY36), as it aims for a developed economy status with a GDP target of $30 trillion by 2047, according to Dr Sunil Kumar Sinha, senior director and principal economist at Ind-Ra. This ambitious growth trajectory signifies a monumental leap from its current lower-middle-income classification as per the World Bank, where it has been positioned since 2007. India's per capita GDP stood at $2,390 in 2022, showcasing substantial economic advancement from its prior low-income status.

“The onward journey of Indian economy from Ind-Ra estimated $3.6 trillion dollars in FY24 will depend on the rate at which the real GDP growth, inflation (GDP deflator) and INR/USD exchange rate evolve. We expect the Indian economy under different scenarios to enter into the upper-middle income category over FY33–FY36 and to a $15 trillion economy over FY43-FY47,” said Dr Sunil Kumar Sinha.

Achieving this $30 trillion GDP milestone necessitates an annual growth rate of 9.7 per cent from FY24 to FY47 in current USD terms, a feat rarely sustained in global economic history, according to Ind-Ra. The challenges of maintaining such growth are amplified by restrictive global demand and trade conditions, protectionist trade practices adopted by developed economies, and the evolving landscape of trade fragmentation. Moreover, environmental commitments are reshaping trade policies, adding another layer of complexity to India's growth aspirations.

Despite these challenges, India's commitment to an energy transition, as evidenced by its declarations at the COP26 Summit, and its focus on low-carbon manufacturing, along with the expansion of the middle class, are expected to be pivotal in driving the economy forward. India's strategic initiatives towards renewable energy, energy efficiency, and the development of a competitive green hydrogen ecosystem are anticipated to unlock new growth areas, fostering a sustainable and robust economic environment, as per Ind-Ra.

Furthermore, the growth of India's middle class, projected to reach over a billion by 2047, is poised to catalyse demand across various sectors, thereby acting as a significant growth engine.

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