India Faces 'Middle Income Trap', Says World Bank
By the end of 2023, 108 countries, comprising a total population of six billion (75 percent of the world's population), were classified as 'middle-income'
India is among over 100 countries that will face “serious obstacles” in the next few decades to become high-income nations, according to a new World Bank report. The report, titled ‘World Development Report 2024: The Middle Income Trap,’ notes that India could take as many as 75 years to attain one-quarter of the United States income per capita, as per media reports.
The report also highlights that China may take over 10 years to achieve this milestone, while Indonesia could take close to 70 years. The concept of the 'Middle Income Trap' is described in the report, which illustrates that countries typically encounter a "trap" when they reach 10 percent of the annual US GDP per capita, or middle of the range as classified by the World Bank, equivalent to $8,000 as of today.
By the end of 2023, 108 countries, comprising a total population of six billion (75 percent of the world's population), were classified as 'middle-income.' These countries had an annual GDP per capita between USD 1,136 and USD 13,845, with two out of three people still living in poverty, the report added.
“The road ahead has even stiffer challenges than those seen in the past: rapidly ageing populations and burgeoning debt, fierce geopolitical and trade frictions, and the growing difficulty of speeding up economic progress without fouling the environment,” the World Bank report stated.
The report criticised the reliance of many middle-income countries on outdated economic strategies, saying, “Yet many middle-income countries still use a playbook from the last century, relying mainly on policies designed to expand investment. That is like driving a car just in first gear and trying to make it go faster.”
