The Standard Chartered Bank report emphasizes the potential for India's per capita income and GDP to rise in the coming years.
According to a recent research report from Standard Chartered Bank, India's per capita income is expected to undergo remarkable growth, surging by almost 70 per cent to reach $4,000 by fiscal 2030, a significant increase from its previous value of $2,450 in fiscal 2023.
This substantial surge in per capita income is set to elevate the country to the status of a middle-income economy, boasting an impressive GDP of $6 trillion. Notably, more than half of this GDP growth will be fueled by household consumption.
The report highlights the expected upward trend in India's per capita income and GDP for the coming years. Over the period from fiscal 2001 to fiscal 2021, there has been a substantial increase in per capita income, surging from $460 to $2,150. It is projected to reach $2,450 by fiscal 2023.
Standard Chartered Bank's projections indicate that the primary driver of this growth will be external trade, anticipated to nearly double to $2.1 trillion by 2030, up from $1.2 trillion in fiscal 2023 when the GDP was at $3.5 trillion. Assuming a steady 10 per cent annual growth in nominal GDP, the report foresees an impressive surge in external trade.
The second significant growth catalyst identified in the report is household consumption, which is expected to rise to $3.4 trillion by fiscal 2030, equivalent to the current size of the entire GDP, up from $2.1 trillion in fiscal 2023. At present, household consumption constitutes a substantial 57 per cent of the country's GDP.
Prime Minister Narendra Modi has made a firm commitment to achieving the $5 trillion milestone for the economy in his next term, provided he wins the elections and returns to power. This achievement would propel India to become the world's third-largest economy, surpassing countries like Japan and Germany.
The report also envisions the rise of nine states to upper-middle-income status, boasting a per capita income of $4,000. However, the specific names of these states have not been disclosed.
At present, Telangana leads the per capita income league table with Rs 2,75,443 in fiscal year 2023, closely followed by Karnataka with Rs 2,65,623, Tamil Nadu with Rs 2,41,131, Kerala with Rs 2,30,601, and Andhra Pradesh with Rs 2,07,771. Nevertheless, the report suggests that Gujarat is expected to take the lead in per capita income by fiscal 2030, followed by Maharashtra, Tamil Nadu, Karnataka, Haryana, Telangana, and Andhra Pradesh.
Among the states mentioned, Telangana, Delhi, Karnataka, Haryana, Gujarat, and Andhra Pradesh collectively contribute 20 per cent to the national GDP. The report predicts that by 2030, these states will achieve a per capita GDP of $6,000. In contrast, larger states like Uttar Pradesh and Bihar, together constituting 25 per cent of the country's population, are expected to have a per capita income below $2,000 even in fiscal 2030, though still double their fiscal 2020 levels.
The report underlines that India's household consumption expenditure currently makes up 57 per cent of its GDP. Even if the household expenditure share reduces by 1 per cent, the size of the consumer market would still be equivalent to the size of the entire economy at present.
Moreover, the report brought attention to the significant role the higher share of the working-age population will continue to play in propelling economic growth. The proportion of working-age individuals in the country is projected to rise from 64.2 per cent in 2020 to 64.8 per cent by 2040, gradually declining to 61.1 per cent in 2050. This demographic advantage is expected to contribute to enhanced labor efficiency, effective capital deployment, and sustained growth.
Nonetheless, the report issues a caution that continuous negative growth in the employment rate could impede the growth of per capita real GDP. To ensure robust and sustained economic growth, the report identifies consistent progress in reforms, macroeconomic stability, a healthy financial sector, corporate sector deleveraging, and increased public capital expenditure as crucial factors enabling growth.
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