In which income group does India fall on the basis of Gross National Income classified by the World Bank?
Lower-middle income group
Understanding India's Income Group Classification by World Bank
The World Bank classifies the world's economies into four income groups: low, lower-middle, upper-middle, and high income. This classification is based on each country's Gross National Income (GNI) per capita, calculated using the World Bank Atlas method. The thresholds for these classifications are updated annually to account for inflation.
Gross National Income (GNI) is a measure of a country's economic activity. GNI per capita is calculated by dividing the total GNI by the country's mid-year population. It reflects the average income level of the people in a country and is used as a key indicator for comparing economic development across nations.
World Bank Income Group Thresholds
The World Bank sets specific GNI per capita thresholds to define each income group. These thresholds change slightly each year. Here are the GNI per capita thresholds for the 2024 fiscal year, based on 2022 GNI data:
| Income Group | GNI Per Capita (US$) |
|---|---|
| Low income | < $1,135 |
| Lower-middle income | $1,136 to $4,465 |
| Upper-middle income | $4,466 to $13,842 |
| High income | > $13,842 |
India's Income Group Status
Based on the World Bank's classification using GNI per capita, India falls into the lower-middle income group. India's GNI per capita for 2022 (used for the 2024 fiscal year classification) was $2,390. Looking at the thresholds above, $2,390 falls within the range of $1,136 to $4,465, which defines the lower-middle income group.
Therefore, on the basis of Gross National Income classified by the World Bank, India is categorized under the lower-middle income group.
Revision Table: World Bank Income Groups and GNI
| Key Term | Definition/Explanation |
|---|---|
| World Bank Income Groups | Classification of countries based on GNI per capita. |
| Gross National Income (GNI) | Total income received by a country from its residents and businesses, regardless of whether they are located in the country or abroad. |
| GNI Per Capita | GNI divided by the mid-year population; used for income group classification. |
| Lower-Middle Income Group | Countries with GNI per capita between $1,136 and $4,465 (for FY2024 classification). |
| India's Classification | Falls under the lower-middle income group as per World Bank classification. |
Additional Information on India's Economy and World Bank Classification
- The World Bank's income classification is primarily analytical and is used to guide lending and aid eligibility, though other factors are also considered.
- Moving from one income group to another is a significant development milestone for a country. It reflects sustained economic growth and improvements in average income levels.
- India has historically moved from a low-income country to the lower-middle income group. The goal for countries in this group is often to transition to upper-middle income status.
- While GNI per capita is a useful indicator, it does not capture income inequality or other aspects of development like health, education, or environmental sustainability.
- The World Bank updates the GNI data and income thresholds every year, typically in July.
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