SBI Research in a new report forecast that India is on path to become the world’s third largest economy by 2028 and will likely transition into an ‘upper-middle income’ country by 2030, as per a PTI report. To fulfil this, India will have to grow nominal GDP at around 11.5% in dollar terms — an achievable target, it added.
India to become ‘upper-middle income’ country by 2030
According to the SBI Research report, India is set to join China and Indonesia as an ‘upper-middle income’ country by 2030. The World Bank’s classifies low income, lower-middle income, upper-middle income and high-income countries by their per capita Gross National Income (GNI) in US dollar, the PTI report said.
In 1990, 51 of the World Bank‘s 218 member countries were classified as low-income, followed by 56 as lower-middle income, 29 as upper-middle income, and 39 as high-income. As of 2024 data, only 26 countries remain low-income, 50 are middle-income, 54 are upper-middle income, and 87 are high-income.
Notably, India moved from lower-middle income category in 2007, when its per capita GNI jumped from $90 in 1961 to $910 in 2007 — an annual growth rate of 5.3%, the SBI Research report noted.
India on path to become world’s third largest economy
As per the SBI Research report, India is set to become the world’s third largest economy, even faster — by 2028. Over the years, it reached the $1 trillion economy mark in 2007, the $2 trillion mark in 2014, $3 trillion mark in 2021, and $4 trillion mark in 2025.
Trend shows a slimming gap in growth rate, and as such, India is projected to reach the $5 trillion mark — making it the world number three — in another two years (2028), the report completed last year, added.
How achievable are these projections?
The SBI report noted that India achieved $1,000 per capita income in 62 years since Independence in 2009, $2,000 per capita in next 10 years in 2019, and took another seven years to achieve $3,000 per capita mark. Adding, “India is set to touch $4,000 per capita in another four years in 2030 to transition to an upper-middle income country and join China and Indonesia at current classification.”
According to the report, India’s growth journey in the last decade shows that its percentile rank in the cross-country distribution of average real GDP growth has increased from the 92nd percentile over a 25-year horizon to the 95th percentile implying a rightward shift in its relative position that places the country deeper into the upper tail of the global growth distribution.
“If we consider the current per capita GNI threshold for high income country of USD 13,936 to be reached by 2047 (as per Viksit Bharat vision), India’s per capita GNI has to grow by a CAGR of 7.5 per cent. This seems achievable as India’s per capita GNI has grown by a CAGR of 8.3 per cent during the last 23 years (2001-2024),” the report said.
Challenges to India achieving upper-middle income status
However, it added that the threshold level for high income country will also get changed by then.
If the threshold for high income country gets changed to USD 18,000 then India’s per capita GNI needs to grow by a higher rate, CAGR of around 8.9 per cent in the next 23 years for it to become the high-income country by 2047.
Assuming 0.6 per cent average population growth and average deflator of China, Japan, the UK, the US and Euro area of around 2 per cent (average between 1992-2024), this translates into growth of nominal GDP in dollar terms of around 11.5 per cent for the next 23 years.
“India should continue its reform agenda so that we can get higher incremental growth required to reach the high-income bracket,” the report added.
Clearly, it said India can and will transition to the upper-middle income country, which has the threshold per capita GNI of around USD 4,500.
Growth of nominal GDP in dollar terms required to achieve this is around 11.5 per cent which is achievable as this growth has been around 11 per cent before the pandemic (FY04-FY20) and around 10 per cent during FY04-FY25, it said.
SBI Research said that the US remains the biggest economy followed by China, with India transitioning to become the third largest economy beating Germany by 2028.
India transitioned from 14th rank in 1990 to fourth in 2025.
The report said India is likely to become a USD 5 trillion economy by 2027/FY28 and USD 10 trillion by 2035/FY36.
Key Takeaways
- India is expected to achieve a nominal GDP growth of 11.5% annually to become the third largest economy.
- The transition to upper-middle income status is projected for 2030, requiring a per capita GNI of around $4,500.
- India’s economic growth has been accelerating, moving from 14th rank in 1990 to 4th by 2025.