India must avoid the middle-income trap, S. Mahendra Dev, chairman of the economic advisory council to the Prime Minister (EAC-PM), cautioned on Saturday.
The middle-income trap is when a nation’s growth stagnates, preventing the transition to high-income status.
Dev cited political and macroeconomic stability alongside a large domestic market as key strengths while observing that “...India must avoid the middle-income trap and build on its achievements to create a society and economy that is prosperous, inclusive, and pro-nature.”
Dev noted that structural transformation remains crucial as agriculture still employs 46 per cent of workers but contributes only 15 per cent of GDP. “Manufacturing employs 11-12 per cent for a 17 per cent GDP share. Boosting manufacturing and services is essential,” he said.
Pointing out that the economic survey suggests 8 per cent growth is required for developed-economy status, he noted two benchmarks — NITI Aayog suggests a per capita income of $18,000, while others argue $14,000 may suffice. “Therefore, 7-8 per cent growth could be adequate,” he said.
