According to reports from Business Standard, when P.V. Narasimha Rao's government dismantled the License Raj in July 1991, India's per capita income stood at $306. Thirty-five years later, that figure has risen nearly ninefold to $2,675. This dramatic transformation represents one of the most significant economic achievements in India's modern history, demonstrating the substantial impact of liberalization reforms on the country's economic development. The World Bank's latest classification confirms India remains in the lower-middle-income (LMI) category with a per capita GNI of about $2,760, significantly below China's $13,200, highlighting the substantial gap that needs to be bridged to achieve high-income status. However, achieving this milestone requires sustained effort, as NITI Aayog Vice Chairman Ashok Lahiri estimates India must achieve an annual average nominal growth rate of 9.25% to become a developed nation by 2047 - a rate the country has never witnessed for any two decades.
As reported by Business Standard, the growth story becomes more complex when comparing India's progress with regional peers. Vietnam, five years into its Doi Moi reforms, had a per capita income of $141 in 1991, less than half of India's. Today, Vietnam's per capita income stands at $4,829, nearly twice that of India. Within South Asia, only Sri Lanka and the Maldives have crossed the upper-middle-income threshold, while India, Bangladesh, Nepal, Bhutan, and Pakistan remain LMI countries. This comparison highlights how India's reform journey, while successful in absolute terms, has not kept pace with some of its Asian counterparts in relative economic advancement, with India being the only one among the six major emerging economies that remains in the LMI group. The challenge is particularly acute when considering historical context - India has been stuck in the lower-middle-income phase for 16 years since 2010, while major East Asian economies typically took 19-26 years to transition from LMI to high-income status.
According to Reuters, India's equity market is showing signs of recovery after a prolonged underperformance period. The benchmark Nifty 50 index has risen 3.6% in over two months since June, trimming its year-to-date losses to 6.6%. This recovery is occurring during a period when the MSCI EM index has fallen by a similar amount, marking a shift for a market that lagged global peers since 2024. Kuunal Shah, fund manager at Carnelian Asset Management & Advisors, expects aggregate earnings growth of 14%-15% for the broader Nifty 500 universe of companies in 2027 and 2028 to form the bedrock of the market's recovery. Shah likened the recent underperformance to 2022, when the Nifty 50 slid 9% in the first half before recovering to end with gains of more than 4%.
As reported by Reuters, Carnelian Asset Management & Advisors, which oversees $1.6 billion in assets, maintains a bullish stance on specific sectors. The fund house is particularly optimistic about pharmaceuticals, manufacturing and capital goods sectors, while avoiding defence, aerospace and electronics manufacturing services companies. Shah noted that valuations in these latter segments have already largely priced in strong growth over the next three to five years. The fund manager expects solid quarterly earnings and changing investor sentiment toward the global AI theme to drive continued momentum in Indian equities through 2027. However, achieving the required 9.25% annual growth rate will necessitate significant improvements in investment patterns, as India's investment rate consistently trailed China's, with China's investment rate going beyond 40% while India averaged 30% in recent decades.
India has set itself two ambitious milestones: becoming an upper-middle-income (UMI) economy by 2037 and a high-income (HI) economy by 2047. The government's roadmap envisages manufacturing accounting for 20% of GDP, agriculture declining to 15%, and services expanding to 65% by 2037. By 2047, India hopes to become a $30-trillion economy, powered by innovation in technology and biotechnology, deep financial markets, export competitiveness, and planned urbanisation. However, achieving these targets requires addressing implementation challenges, as the four labour codes passed by Parliament remain only partially operational due to federal system constraints, and the farm laws of 2020 were repealed after protests. The success will depend on balancing democratic debate with decisive reform implementation while maintaining inclusive growth that ensures rural populations, informal workers, and marginalised communities share in prosperity. As NITI Aayog notes, for per capita income to rise, investment levels must increase and the incremental capital-output ratio (ICOR) needs to fall, with India's ICOR being below China's in recent years despite lower investment rates.
