World Bank flags ‘middle income trap’ risk for India, China, 106 other nations; moots new playbook over ‘last century’ ideas to break out.
India may be the fastest growing major economy but it will take 75 years for its per capita income to reach a quarter of U.S. income levels if current trends continue, the World Bank warned on Thursday, identifying it as one of 100-odd countries including China that face the risk of falling into the “middle income trap”.
Countries growing wealthier usually hit a “trap” at about 10% of annual U.S. GDP per person. This is currently the equivalent of $8,000 today, or the middle of the range of what the Bank classifies as “middle-income” countries. Since 1990, only 34 middle-income economies have managed to shift to high-income status, with over a third of them benefiting from integration into the European Union or previously undiscovered oil reserves.
The Reality:
I would discard the reports from World Bank into a dustbin as these only try to be too pessimistic when it comes to growing economies.
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India's economy has already fallen the 'middle income trap' and trying hard to come out of it. The current per capita GDP in India is close to $3000 and it's not even 5% of what US have. But, I would call it nearly 20% because India is much much cheaper than US. While a US person can't save big earning $50k yearly, a person earning only $5k can save half of what he is earning (living in a town or Suburban areas).
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Also at what pace India's economy is running, I've no doubts that the next 10 years will easily see per capita above $10k.
$10k in India is equivalent to $100k in NY, CA, LA.
World Bank needs to view Indian economy with a view of 'How much is How much in Indian terms.' They should now leave comparing Indian Economy to Debt-Dollar US and EU.
World Bank or any other global Propoganda agency must talk about India in Indian terms. India's Economy is very much peculiar as nearly 70% of India's total population still lives in villages.