India could soon be the third largest economy, but what about GDP per capita?

India will become the third largest economy in FY28, Finance Minister Nirmala Sitharaman said at the recent Vibrant Gujarat Summit. This is also the view of the International Monetary Fund and is a good thing, but it alone will not significantly improve the quality of life of the average Indian.

India will become the third largest economy in FY28, Finance Minister Nirmala Sitharaman said at the recent Vibrant Gujarat Summit. This is also the view of the International Monetary Fund and is a good thing, but it alone will not significantly improve the quality of life of the average Indian.

Unless India can achieve double-digit growth for a decade or more, GDP per capita will remain low, not only compared to that of larger economies but also compared to those of middle-income countries.

Hello! You are reading a premium article

Unless India can achieve double-digit growth for a decade or more, GDP per capita will remain low, not only compared to that of larger economies but also compared to those of middle-income countries.

Here are the growth rates the IMF forecasts for the next five years for the US, China, Japan and India.

Based on the World Economic Outlook's projections for GDP in 2024 and the above growth rates, the GDP of these economies in billions of current US dollars would be as follows.

Here are the World Bank's projections for the population size of these countries in 2028.

This is equivalent to the following GDP per capita in current US dollars:

If the US grows by 1% in 2028, global output will increase by $303 billion. India would need to grow by almost 6% to add a similar amount. To achieve the output increase achieved by 1% growth in China in 2028, India would need to grow by more than 4%.

India's current GDP per capita is 4% of the average US citizen, less than 10% of the average Japanese citizen, and 23% of the average Chinese citizen.

As a low-income country, it is easier for India to grow quickly than for larger economies. This does not mean that India's growth performance is to be regretted.

But the fact is: for economic growth to increase citizens' incomes, growth must accelerate to double-digit levels and stay there for a decade or longer, as was the case in China during its high-growth years.