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India: A lower-middle-income country

The World Bank divides the world's economies into four income groups: low-income countries, lower-middle, upper-middle and high income countries. The rankings are updated each year on July 1 and are based on the current GNI per capita in USD (using the exchange rates of the ) of the previous year (i.e. 2019 in this case).

The classifications change for two reasons

  • In each country, factors such as economic growth, , exchange rates and population growth influence GNI per capita. Reviews of national accounts methods and data can also affect GNI per capita.
  • To maintain the income classification thresholds set in real terms, they are adjusted each year according to inflation. The (SDR) deflator is used, which is a weighted average of the GDP deflators of China, , the United Kingdom, the United States and the euro area.This year, the thresholds have increased in line with this measure of inflation.

Highlights of this Classification

  • National accounts reviews played an important role in the upward review of Benin, Nauru and Tanzania.
  • For Sudan, the GNI series for 2009-2018 has been revised following the exchange rate revisions. The 2018 GNI per capita has been revised to $ 840 from the previously published $ 1,560.
  • Algeria, Indonesia, Mauritius, Nepal, Sri Lanka and Romania were very close to the respective thresholds last year.
  • Until last year (fiscal year 2019), the income classifications were for analytical purposes and did not influence the terms of the World Bank loans.
  • However, since the last fiscal year, the high income threshold has also been a determining factor for interest rates.
  • Surcharges apply to the interest rates of countries that have been classified as high income for two consecutive years.
  • New thresholds are determined at the start of the World Bank's fiscal year in July and remain fixed for 12 months regardless of subsequent revisions to estimates.
  • The thresholds for income classification have increased from last year due to SDR inflation.

As of July 1, 2019, the new thresholds for classification by income are:

ThresholdJuly 2019/$ (new)July 2018/$ (old)
Low income
Lower-middle income1,026 – 3,995996 – 3,895
Upper-middle income3,996 – 12,3753,896 – 12,055
High income> 12,375> 12,055
Source: World Bank

The following countries are assigned to new income groups

 New groupOld groupGNI/Capita/$ (2018) as of July 1, 2019GNI/Capita/$ (2017) as of July 1, 2018
ComorosLower-middle incomeLow income1,320760
GeorgiaUpper-middle incomeLower-middle income4,1303,790
KosovoUpper-middle incomeLower-middle income4,2303,890
SenegalLower-middle incomeLow income1,410950
Sri LankaUpper-middle incomeLower-middle income4,0603,840
ZimbabweLower-middle incomeLow income1,790910
ArgentinaUpper-middle incomeHigh income12,37013,040
Source: World Bank

India is in lower – middle class

India continues to be a lower-middle-income country along with 46 others, while Sri Lanka has climbed to the upper-middle-income group for the fiscal year 2020, according to the World Bank's classification of countries by income levels, released on July 1.

  • Sri Lanka entered the lower-middle-income group in the fiscal year 1999, from the low-income category and continued for over two decades, before moving to the upper-middle-income group this year.
  • India became a lower-middle-income nation from low-income in the fiscal year 2009.
  • Of 218 economies, 80 are in the high-income group, 60 in the upper-middle, 47 in the lower-middle and 31 in the low-income group.
  • The classification is updated on the first day of July every year. The gross national income per capita used for this year's classification is based on 2018 data.
  • Besides Sri Lanka, in 2019 six other countries – Argentina, Comoros, Georgia, Kosovo, Senegal and Zimbabwe – have seen classification changes based on income levels.
  • Argentina is the only country that slipped from the high-income to upper-middle-income group. The rest moved up.

India and BRICS

  • The Maldives with a gross national income of $9,310 or Rs 6,36,432 and Sri Lanka with a gross national income of $4,060 or Rs 2,77,542, are the only two countries in South Asia in the upper-middle-income group.
  • India with a gross national income of $2,020 or Rs 1,38,087; Bangladesh with a gross national income of $1,750 or Rs 1,19,630; Bhutan with a gross national income of $3,080 or Rs 2,10,549 and Pakistan with a gross national income of $1,580 or Rs 1,08,009 fall in the lower-middle-income group.  
  • Meanwhile, Afghanistan with a gross national income of $550 or Rs 37,598 and Nepal with a gross national income of $960 or Rs 65,626 are among the low-income group economies.
  • Among fellow developing economies – BRICS – India is the only country in the lower-middle-income group.
  • The others: Brazil at $9,140 or Rs 6,24,810; Russia at $10,230 or Rs 6,99,323; China at $9,470 or Rs 6,47,369 and South Africa at $5,720 or Rs 3,91,019 are in the upper-middle-income group.
  • The high-income threshold is also a deciding factor for lending rates since 2018-19, before which income classifications did not influence lending terms.
  • “Surcharges are applied for lending rates of countries which have been categorized as high income for two consecutive years,” a World Bank release said.
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