How India’s average state income could approach high-income status by 2047: RBI’s thought experiment

India’s average state-level per capita income could approach high-income thresholds by 2046-47 if the growth momentum of the past two decades is sustained, Reserve Bank Deputy Governor Poonam Gupta has said.

“Looking ahead, if growth trajectories of the past two decades are sustained, the average state per capita income could approach high-income thresholds by 2046-47,” Gupta said in a speech at the 'Columbia Indian Economy Summit 2026' at the Raj Centre on Indian Economic Policy at Columbia University last month.

“Crucially, below-median states are projected to contribute substantially to this expansion, reinforcing the broad-based nature of India’s growth story,” she said.

The RBI posted the speech on its website on Monday.

Gupta described the projection as part of a “simple thought experiment” in which the central bank calculated each state’s average annual growth in per capita gross state domestic product (GSDP) over the past decade and extended the same pace for the next two decades.

“On this basis, India’s per capita income is projected to grow by 4 times in USD terms by 2046-47,” she said, adding that the expansion is expected to be broad-based, with both richer and poorer states recording substantial gains.

The RBI Deputy Governor said India’s growth trajectory over the past four decades points to a significant structural transformation.

“India’s economic growth has consistently accelerated since the early 1980s,” she said.

Average real GDP growth rose from 5.7% in the 1980s to 6.6% in the 2010s and reached 7.7% in the most recent four-year period excluding the pandemic years, she noted.

“The acceleration is even more pronounced in per capita income,” Gupta said.

“From about US$ 274 in 1981 and US$ 306 in 1991, per capita income has risen nearly tenfold to around US$ 2700 in 2024.”

“Importantly, while it took over two decades for per capita income to double initially, it has expanded by almost fivefold in the subsequent two decades, indicating a clear structural shift in growth momentum,” she said.

Gupta said India has “attained a virtuous cycle of accelerated growth and macroeconomic stability”, supported by lower inflation, manageable current account deficits, stronger bank balance sheets and improved fiscal quality.

“The central question is no longer whether India will prosper, but how quickly, how broadly, and how equitably that prosperity would be shared across its states and its people,” she said.

On state-level performance, Gupta said, “India’s growth story consists of broad-based prosperity, with every state recording a significant increase in per capita gross state domestic product over the past two decades.”

She noted that average per capita incomes across states have surged nearly fivefold in current US dollar terms and more than threefold in inflation-adjusted rupee terms over the last two decades.

At the same time, she said, “the pace of income growth has varied across states”.

“Some states have become five to ten times more prosperous over the last two decades, while others have recorded more modest gains of around three times,” Gupta said.

She said richer states had historically grown faster than poorer ones, but the divergence has weakened significantly.

“The growth gap between richer and poorer states has narrowed over successive decades,” she said.

“The attrition of divergence can be attributed to the better performance of relatively lower-income states such as Odisha, Assam, and Uttar Pradesh during the past decade.”

Gupta said convergence has been more decisive in broader welfare indicators than in income levels alone.

“Multiple other dimensions of socio-economic wellbeing have been converging,” she said, citing health, education, sanitation, access to electricity, clean cooking fuel, drinking water and financial inclusion.

“Per cent of women in India with access to a bank account has jumped to around 80% during 2019-21 from 14% in 2005-06,” she noted.

However, she pointed out that convergence has not been universal.

“Interstate convergence appears limited for some of the structural variables, including the share of agriculture in state economies, productivity growth, capital formation, FDI inflows, and bank credit growth,” she said.

Gupta said achieving higher prosperity by 2047 would require differentiated strategies for states depending on their stage of development.

“For above-median states, the focus ought to be on innovation and scale, planned urbanization, attracting global and domestic talent, and expanding market share both domestically and internationally,” she said.

“For below-median states, priorities could include unlocking productivity in agriculture, building skills, integrating more in the national and international labour markets, and strengthening fiscal capacity to support faster growth.”