India Must Grow At 7-10% For 20-30 Years To Escape Middle-income Trap : Niti Aayog

India needs to sustain a growth rate of 7 to 10 per cent for the next 20 to 30 years to escape the middle-income trap and achieve developed nation status, according to an approach paper from the NITI Aayog. The paper envisions a per capita income of USD 18,000 per annum and a USD 30 trillion economy by 2047, coinciding with the country's centenary of independence.

"The GDP would have to grow nine times from today’s USD 3.36 trillion, and the per capita income would need to rise eight times from today’s USD 2,392 per annum," the government's think tank stated after its ninth governing council meeting, attended by chief ministers and lieutenant governors.

Niti Aayog defines 'Viksit Bharat' as a nation with attributes of a developed country, featuring a per capita income comparable to current high-income countries. "It is a Bharat whose social, cultural, technological, and institutional features will mark it out as a developed nation with a rich heritage and one that is capable of functioning at the frontiers of knowledge. The World Bank defines high-income countries as those whose annual per capita income is more than USD 14,005 (in 2023)," the paper added.

Prime Minister Narendra Modi, addressing the governing council, emphasised India's youthful demographic as a key attraction. "India is a youthful country. It is a huge attraction for the entire world because of its workforce. We should aim to make our youth a skilled and employable workforce. Emphasis on skill, research, innovation, and job-based knowledge is necessary for making 'Viksit Bharat'," Modi said.

The approach paper highlighted that nearly 50 per cent of India’s population is below the age of 25 and accounts for nearly 20 per cent of the world’s total young population. “This is an enormous opportunity, likely to last till 2047. Using this dividend well, we can propel India into a 'Viksit Bharat'. We are already a talent hub with the largest number of STEM graduates in the world - over 2 million every year, approximately 43 per cent of whom are women. We also have the 3rd biggest startup ecosystem in the world. Leveraged together and properly supported, our demography and enterprise can propel our economic growth,” the paper noted.

The document also set an ambitious target of raising the average life expectancy to around 84 years, among the best globally. “The total fertility rate (TFR) will gradually decline to about 1.80, and the population will stabilise at about 1.65 billion by 2047. Being a youthful nation, the working-age population would be around 1.12 billion, making it the single largest workforce of any nation in the world,” it projected.

Beyond avoiding the middle-income trap, Niti Aayog identified several challenges, including upgrading capabilities in manufacturing, logistics, and R&D; balancing energy security, access, affordability, and sustainability; improving the competitiveness of India's industry, particularly in logistics and cost of power; and bridging the rural-urban income gap while promoting balanced regional development.