It Is the Quality of Growth, Not Its Speed, That Keeps India in the Lower-Middle Bracket

Growth That Does Not Move People Will Not Move India Up

India has spent 19 years in the World Bank's lower-middle-income group. In July 2026, Vietnam, the Philippines and Sri Lanka moved up, while India's GNI per capita, $2,760, remained well below the $4,636 threshold. TAN's position is plain: what keeps India here is not the speed of its growth but its quality. Too few workers are moving into productive, formal jobs.

The reasoning Countries become richer when workers move from low-productivity work to high-productivity work.

Economists call this structural transformation. India's numbers show how slowly that move is happening.

• The workforce grew, but not into better jobs. According to the World Bank, India's labour force grew by more than 100 million in under a decade. About two-thirds of that increase came from women, mostly self-employed in agriculture.
• Farming still holds too many. About 43% of India's workers remain in agriculture.
• Most non-farm work is informal. About 79% of non-agricultural workers are in informal enterprises, where output per worker is low.
• Factories grew without hiring at scale. Registered factories doubled from 1.3 lakh in 2004-05 to 2.6 lakh in 2024-25, but manufacturing's share of jobs has not risen. Production has become more capital-intensive and as reported, fewer people found formal manufacturing jobs than gig jobs between 2020-21 and 2024-25. Meanwhile, wealth is concentrating. India has about 9.4 lakh dollar millionaires, comparable to Switzerland. An economy that creates millionaires faster than a middle class is growing, but not broadly.

The strongest counter-argument The best case against this view comes from the government's own data.

The Economic Survey points to rising net additions to the Employees' Provident Fund Organisation, a recovery in women's labour force participation and falling unemployment rates in the Periodic Labour Force Survey. It argues that digital public infrastructure and production-linked incentives are building the base for formal growth.

Development takes decades, the argument runs and India is on the path. Judging it by one classification is premature.

Why the

position still holds These are real gains, but they measure participation and registration more than transformation. Rising provident fund enrolment can reflect existing jobs becoming formal on paper, not new workers leaving farms.

The recovery in women's participation, by the World Bank's account, is mostly self-employment in agriculture, which is the very work structural transformation is supposed to move people out of. Lower unemployment means little when, for the poor, being unemployed is unaffordable and any work is taken.

South Korea's rise shows what transformation looks like: millions moving from farms into factories within a generation. India's challenge is not to grow faster on paper, but to make growth carry people with it.