Is India heading towards a middle income trap?



I read a comment on a post here saying that India is at risk of running into "middle-income trap". Unfortunately, I couldn't find the post or comment to ask them more about it.


There seems to be indicators pointing both ways. On one hand, we have a rapidly ballooning consumer culture with a young population with discretionary income, and with EMIs for various products which helps people to buy stuff they desire. India is considered an emerging market by many corporations. We have a huge population which acts as both a consumer and a labor force. All good signs of a strong economy and potential to become a more developed or industrialized country.


On the other hand, many manufacturing industries which were anticipated to move to India after leaving China instead seem to be setting up in other South East Asian countries instead. There is still brain drain with top talent leaving for greener pastures, climate change is alleged to cause massive disruptions in the near future, and only a few tier-1 cities bearing the brunt of a population migrating into urban areas. From what I have read, having an innovative and diverse industrial economy is necessary to avoid the middle-income trap. We have great talent in this country but due to various factors like brain drain, no funding and low ease of doing business, innovation is not growing at an optimal pace.


I am no economist and this is simply what I have gleaned from what I have read. So, what do you guys think of this?




Most of our people are poor or the poorest you will ever find ,visit some of our villages if you are in a metro or a city you have no idea how poor our people are. Please don’t read some stupid posts on social media or mainstream media .everyone is chest thum in media it’s all fluff there..



The algorithms in social media makes it impossible to. It's designed to curate content for you and results in echo chambers to show you the world as you want.




Let us first reach middle income country status then we can worry about middle income trap lol. As of now we are still a low middle income country bunched with the likes of Pakistan, Bangladesh, Kenya etc.



Came here to say exactly this. Some of our states are also on par with Sub Saharan and war ravaged African countries



Middle income trap..bruh we are a low income country and parts of UP and Bihar are Sub-Saharan Africa




Let’s first become a middle income country. I know people who work for 12-14 hours a day 6 days a week to get 18k per month.




We’re still a poor nation per capita.




The archaic income tax rates need to be replaced by something far more contemporary in order to avoid the situation of a middle income trap and stimulate the economy. In the era of GST and other indirect taxes, this just seems like an added headache.




Income taxes are like heroin for the government. It's easy money and hits just the employed middle class. Easy to squeeze.




We are not even middle income yet and this bhaisaab is worried about middle income trap




Middle income trap? We have more poverty than Sub-Saharan Africa, less rank in HDI than places like Venezuela, El Salvador, Iraq, Iran, Tajikistan. With all these communal tensions, lack of investment in infrastructure, declining economy, I doubt that we'd ever even get out of the current situation we're in.




Wow, declining economy? India? How?




Our country should be happy if it can indeed get into the middle income trap. We are one of the poorest countries in the world.




An avg Indian will think that s/he is living as middle class watching all those YouTube videos and short form content but they all are not middle class. If your income is between 9lpa and 30lpa then you are middle class which is only 2-5% of population.

一个普通的印度人会认为他/她是中产阶级,看那些YouTube视频和短视频就知道了,但他们其实不是中产阶级。如果你的收入在9-30 lpa之间,那么你就是中产阶级,只占人口的2-5%。



People need to understand why the middle income trap exsted, and why it is weakening over time

The trap happens when a develo country exports to developed countries and the flow of trade goes that way

If that is the main trade relationship, the moment the country is too expensive it gets abandoned for a cheaper one, and growth stalls

However, the more global south-south trade there is, the less countries depend on wealthy nations, and the weaker the trap is

Since the modern world doesn't have the north-south hierarchy it once had, it's likely that the middle income trap is a thing of the past, or at least it's a much easier trap to get out of

China is about to officially become a developed country by 2025 or so, Malaysia became one in 2019

India should be able to replicate its sucess if it focus on improving innovation, energy production and increasing female productivity










Middle-income trap happens when your population grows old before making it to developed status. As long as you maintain a 1.9-2.1 fertility rate you will never fall into a middle-income trap, because you always have another shot at industrialization or another way of getting rich.

Malaysia is already a developed nation. Turkey is almost a developed country, and its fertility rate is 1.9.

Countries like Lebanon or Thailand are in the middle-income trap.






Middle-income trap is not about age; it is about the cost of labor. If your country is earning a large portion of its money because your labor is relatively cheap (as China was when it became the world's manufacturing hot spot), then if wages rise (becoming middle-income), companies will look for other countries where labor is cheaper, and your manufacturing sector can collapse.

To avoid this trap, your country needs to be providing something more than just cheap labor. Sort of. Cheap labor might still be the key, but higher and higher skilled kinds of labor. If your industry is dominated by "simple" factory labor, African countries will undercut on price. But if your factories provide high tech machining, on site mold making, etc., that less developed countries cannot match, then you are adding more value.

The trap keeps moving upwards: you need more of your people to be engineers who design products, not just laborers. Later, you need more of your workers to be the kinds of experts that other countries come to to solve their own problems






What is your idea of a middle income trap. Let's say we get stuck in a Middle Income Trap and end with a economy like Turkey or Malaysia. What's so bad?? I mean of course they are not super powers. Still people lead a good life there by most metrics. That should be good enough for our people




Malaysia is a developed country now isn't it?


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