A research report has projected that India’s average income will increase by 70% to $4,000 by fiscal year 2030, up from $2,450 in fiscal year 2023. This growth is expected to make India a middle-income economy with a $6 trillion gross domestic product (GDP), with approximately half of it coming from household consumption.
Over the years, the per capita income/GDP in India has seen steady growth, rising from $460 in fiscal year 2001 to $1,413 in fiscal year 2011, and then to $2,150 in fiscal year 2021.
According to Standard Chartered Bank’s weekend report, the nominal GDP is forecasted to grow at an annual rate of 10%, with external trade being the main growth driver, which is expected to double to $2.1 trillion by 2030 from $1.2 trillion in fiscal year 2023. The second biggest growth driver is household consumption, which is projected to increase from the present $2.1 trillion to $3.4 trillion by fiscal year 2030, equivalent to the GDP for fiscal year 2023.
Last week, Prime Minister Narendra Modi stated his commitment to bringing India’s economy to $5 trillion during his next term in office, making it the third-largest economy behind the US and China, surpassing Japan and Germany.
The report also predicts that nine states, instead of just one, will eventually reach the upper middle-income category with a per capita income of $4,000 or more. Telangana currently leads in per capita income with Rs 2,75,443 ($3,360) in FY23, followed by Karnataka, Tamil Nadu, Kerala, and Andhra Pradesh.
States like Telangana, Delhi, Karnataka, Haryana, Gujarat, and Andhra Pradesh, which together contribute 20% of the country’s GDP currently, are expected to have a per capita GDP of $6,000 or more by fiscal year 2030.
However, larger states like Uttar Pradesh and Bihar, accounting for 25% of the population, will still have per capita income below $2,000 in fiscal year 2030.
The consumer market size is expected to remain the same as the current economy, even if household consumption expenditures decrease by 1% from their current proportion of GDP, which accounts for 57% of the GDP.
The working-age population will continue to be the primary growth enablers, with 64.2% of the population in 2020 being of working age. This percentage is expected to increase to 64.8%, with a slight decline to 63.6% in 2040 and 61.1% in 2050. This will lead to increased capital investment, labor productivity, and population growth among the working-age population, positively impacting the economy. However, a declining employment rate could hinder the expansion of real GDP per capita.
The report also highlights other growth accelerators such as macro stability, a sound financial system, corporate sector deleveraging, and public capex initiatives.
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