India’s Risk of the Middle-Income Trap: What Needs to Be Done?

India has a major concern ahead due to which it can fall into ‘middle income trap’. The World Bank’s most recent report also touches on this risk, pinpointing that absent further strategic actions, India may become a country that perpetually resides in the middle-income nation group.

Understanding the Middle-Income Trap

The World Bank divides countries with an annual Gross Domestic Product per capita between one thousand one hundred and thirty-six and thirteen thousand eight hundred and forty-five as the middle-income earning nations.

Today, per capita GDP of India is $ 2500 that puts it firmly in this category. The worry is that it might face difficulties in emerging out of this income level if it does not improve significantly.

Challenges Facing India

India’s main challenges include:

Falling Fertility Rates: Newborn illiteracy rate is also on the rise and the percentage of youth below 35 years of age has been declining which means a shortage of labors.

Climate Change: This shows that the effects of climate change are bound to wade into economic sovereignty as has been depicted in the subsequent sections.

Geopolitical Tensions: Current domestic and international wars and relegation of globalization and liberalization policies may impact growth of the economies.

The Path Forward: The 3I Strategy

To avoid falling into the middle-income trap, India needs to focus on the “3I Strategy”—Investment, Infusion, and Innovation:To avoid falling into the middle-income trap, India needs to focus on the “3I Strategy”—Investment, Infusion, and Innovation:

1. Investment: Therefore, the required investments whether domestic and foreign have to be encouraged and utilised in the Indian economy.

2. Infusion: How to bring in higher foreign technology level to stimulate industrial development.

3. Innovation: Outlining the expenditure on research and development in order to foster the new sources of growth.

Therefore, this paper aims to discuss the successes of several countries in this regard, and South Korea is among the most successful nations that utilizing all the three strategies to boost its economy.

Steps for India

To break free from the middle-income trap, India should:

Boost Innovation: Expand the research and development funding and push the innovations.

Invest in Education: Preparation of skilled professional to meet the future capacity requirements.

Build Strong Institutions: Develop frameworks that will enhance the framework to accommodate innovation.

So, by focusing on these areas, India can strive for a better economic growth and not remain in middle-income country trap.

Praveen is a passionate law student from Bihar. who brings a unique blend of legal knowledge and writing expertise to the table. With 4yr of experience in content writing, she excels at translating complex legal concepts into accessible and well-researched engaging content. Contact: [email protected]

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