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Standard Chartered Bank predicted in a recent research report that India’s per capita income will increase by nearly 70 percent between fiscal 2023 and fiscal 2030, from $2,450 to $4,000.
This expansion is anticipated to help the nation attain the status of a middle-income economy with a $6 trillion GDP. Notably, more than half of this GDP will be driven by household spending.
The report emphasises an expected long-term upward trend in India’s per capita income and GDP. From 2001 to 2021, the per capita income increased substantially, from $460 to $2,150. It is anticipated to reach $2,450 by 2023.
According to Standard Chartered Bank’s projections, the leading development driver will be external trade, which is projected to nearly double to $2.1 trillion by 2030, from $1.2 trillion in fiscal 2023, when the GDP was $3.5 trillion. The report anticipates a significant increase in international trade assuming a nominal GDP growth rate of 10% annually.
Telangana currently has the highest per capita income with Rs 2,75,443 in fiscal year 2023, 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. In spite of this, the report predicts that Gujarat will have the highest per capita income by the end of the fiscal year 2030, followed by Maharashtra, Tamil Nadu, Karnataka, Haryana, Telangana, and Andhra Pradesh.
Telangana, Delhi, Karnataka, Haryana, Gujarat, and Andhra Pradesh contribute 20% to the national GDP and are projected to reach a per capita GDP of $6,000 by 2030. Nonetheless, larger states such as Uttar Pradesh and Bihar, which account for 25 percent of the country’s population, are projected to have a per capita income below $2,000 even in fiscal 2030, which would be double their fiscal 2020 levels.
The report emphasizes that India’s current household consumption expenditures account for 57 percent of its gross domestic product. Even if the proportion of household spending decreases by 1%, the size of the consumer sector would stay equal to the current size of the whole economy.
In addition, the report emphasised that the larger proportion of the population in working age will continue to have a significant role in promoting economic development. The proportion of the country’s population that is of working age is expected to increase from 64.2% in 2020 to 64.8% in 2040, before declining to 61.1% in 2050. It is anticipated that this demographic advantage will contribute to labour effectiveness, capital deployment, and continued growth.
But the study warns that if the unemployment rate keeps going down, it could slow down the growth of real GDP per person. For strong and long-lasting economic growth, the study says that consistent reform progress, macro stability, an efficient financial sector, deleveraging in the corporate sector, and more public capital expenditure (capex) are all important.
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