India’s average income projected to increase by 70% to $4,000 by FY30: Report

A research report projects that India’s average income is to rise by 70 per cent to $4,000 by fiscal year 2030 from $2,450 in fiscal year 2023. This will make India a middle-income economy with a $6 trillion gross domestic product (GDP) with about half coming from household consumption.

The per capita income/GDP has increased from $460 in fiscal year 2001 to $1,413 in fiscal year 2011 and then to $2,150 in fiscal year 2021.

According to a weekend report by Standard Chartered Bank, the nominal GDP is forecast to grow by 10 per cent annually. The main growth driver is external trade, which may double to $2.1 trillion by 2030 from $1.2 trillion in fiscal year 2023.

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Household consumption is said to be the second-biggest growth driver, according to the report. By fiscal year 2030, consumption is expected to jump from the present $2.1 trillion to $3.4 trillion, which is as big as the GDP for fiscal year 2023.

In a statement made last week, Prime Minister Narendra Modi said that he would ensure that India's economy is brought to $5 trillion during his next term in office, making it the third-largest behind the US and China. Japan is now ranked third, while Germany is fourth.

The report predicts that nine states, rather than just one, will eventually reach the upper middle-income country category with a per capita income of $4,000 or more. Telangana currently holds the top spot in the league table for per capita income, with Rs 2,75,443 ($3,360) in FY23. Karnataka is next 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.

Telangana, Delhi, Karnataka, Haryana, Gujarat, and Andhra Pradesh together make up 20 per cent of the country’s GDP now, and by fiscal 2030, each of these states will have a per-capita GDP of $6,000 or more.

However, big states like UP and Bihar, which together account for 25 per cent of the population, will still have per capita income below $2,000 in fiscal year 2030.

The consumer market will still be the same size as the economy today even if household consumption expenditures fall by 1% from their current proportion of GDP, which accounts for 57 per cent of the GDP.

The large percentage of people who are of working age will continue to be primary growth enablers. In 2020, 64.2 per cent of the population in the country was of working age. This percentage will increase to 64.8 per cent, but it could also slightly decline to 63.6 percent in 2040 and 61.1 percent in 2050.

As a result, the economy will gain from increased capital investment, labour productivity, and the population growth of those who are working age. However, a continually declining employment rate is a barrier to the expansion of real GDP per capita.

Other growth accelerators mentioned in the paper include macro stability, a sound financial system, corporate sector deleveraging, and public capex initiatives.

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