World Bank Recommendations for India to Achieve Developed Status by 2047
Kartavya Desk Staff
Syllabus: Economics
Source: IT
Context: The World Bank’s India Country Economic Memorandum (2025) states that India needs an average growth rate of 7.8% until 2047 to achieve high-income status.
About World Bank Recommendations for India to Achieve Developed Status by 2047:
• Increase Investment & Capital Formation: Raise investment from 33.5% to 40% of GDP by 2035 through private and public sector participation. Improve financial sector regulations and ease FDI restrictions. Boost MSME credit access and streamline business regulations.
• Raise investment from 33.5% to 40% of GDP by 2035 through private and public sector participation.
• Improve financial sector regulations and ease FDI restrictions.
• Boost MSME credit access and streamline business regulations.
• Enhance Labor Force Participation: Increase overall labor force participation from 56.4% to 65%. Raise female workforce participation from 35.6% to 50%. Encourage job-rich sectors like manufacturing, hospitality, transportation, and the care economy.
• Increase overall labor force participation from 56.4% to 65%.
• Raise female workforce participation from 35.6% to 50%.
• Encourage job-rich sectors like manufacturing, hospitality, transportation, and the care economy.
• Boost Structural Transformation & Trade Integration: Reduce agriculture employment from 45% by shifting labor towards manufacturing & services. Strengthen infrastructure, adopt new technology, and simplify labor regulations. Enhance Global Value Chain (GVC) participation to compete with Vietnam, Thailand, and China.
• Reduce agriculture employment from 45% by shifting labor towards manufacturing & services.
• Strengthen infrastructure, adopt new technology, and simplify labor regulations.
• Enhance Global Value Chain (GVC) participation to compete with Vietnam, Thailand, and China.
• Promote Balanced Growth Among States: Support less developed states in improving health, education, and infrastructure. Encourage industrialized states to deepen business reforms & GVC participation. Expand incentive-driven federal programs like the Urban Challenge Fund.
• Support less developed states in improving health, education, and infrastructure.
• Encourage industrialized states to deepen business reforms & GVC participation.
• Expand incentive-driven federal programs like the Urban Challenge Fund.
Challenges to Achieving High-Income Status:
• Slow Employment Growth: Job creation has not kept pace with GDP growth, leading to high informal sector dependency.
• Low Female Workforce Participation: Cultural and economic barriers restrict women’s workforce engagement, limiting economic expansion.
E.g. Female LFPR in urban areas (Oct-Dec 2024) was 25.2%, far below male LFPR at 75.4%.
• Investment & Infrastructure Bottlenecks: Slow industrial growth, land acquisition issues, and infrastructure deficits hinder long-term investments.
E.g. GDP growth slowed to 5.4% in Q2 FY 2024-25 from 8.1% a year earlier.
• Unequal Growth Among States: Low-income states lag behind in productivity and human capital development.
• Trade & Productivity Gaps: India’s Global Value Chain (GVC) participation is lower than peers like China & Vietnam, limiting global trade integration.
Way Ahead:
• Accelerate Infrastructure & Investment Reforms: Improve land & labor laws, ease FDI norms, and reduce compliance burden for businesses.
• Expand Employment & Women’s Workforce Participation: Implement targeted policies to boost job-rich sectors and enhance childcare & safety measures for women.
• Strengthen Global Trade & Manufacturing: Increase export competitiveness by integrating into Global Value Chains (GVCs).
• Ensure Equitable Growth Among States: Improve health, education, and infrastructure in lagging states while empowering developed states with advanced reforms.
• Promote Technology & Innovation: Enhance AI, automation, and digital transformation to boost productivity and economic efficiency.
Conclusion:
India’s goal of achieving high-income status by 2047 is ambitious but achievable with strategic reforms in investment, labor markets, trade, and state-level development. A balanced growth model, supported by strong governance and global integration, will be key to transitioning into a developed economy.
• Capitalism has guided the world economy to unprecedented prosperity. However, it often encourages short-sightedness and contributes to wide disparities between the rich and the poor. In this light, would it be correct to believe and adopt capitalism for bringing inclusive growth in India? Discuss (UPSC-2014)