How Long Will It Take for India’s Per Capita GDP to Catch Up with China’s?

 

How Long Will It Take for India’s Per Capita GDP to Catch Up with China’s?

India and China, two of the largest economies in the world, have followed distinct economic paths over the past few decades. While both countries have experienced rapid growth, their per capita GDPs (a measure of economic output per person) are starkly different. In 2023, China’s per capita GDP is approximately six times higher than India’s. This raises an intriguing question: how long will it take for India to catch up with China, assuming both countries continue to grow at their historical average rates?

In this article, we explore different growth scenarios to estimate the timeline for when India’s per capita GDP might match China’s, based on the current growth rates of both countries.

The Basics of Economic Growth and Per Capita GDP

Before diving into the calculations, let’s clarify some concepts. Per capita GDP is the total economic output (GDP) of a country divided by its population. It provides a way to compare the average economic well-being of citizens across countries, regardless of their size.

Both India and China have experienced remarkable economic growth over the last few decades. China, having started its economic reforms in the late 1970s, has maintained an average annual growth rate of around 9% over the past 40 years. India, on the other hand, began its economic reforms in the early 1990s and has seen average annual growth rates around 6–7% during the same period.

However, despite China’s impressive growth, India’s economy is catching up, with projections suggesting that India will continue to grow faster than China in the coming decades due to its younger demographic and economic reforms.

The Assumptions

For simplicity, let’s use some basic assumptions to calculate when India’s per capita GDP will catch up with China’s:

• India’s current per capita GDP (2023): $2,000
• China’s current per capita GDP (2023): $12,000
• India’s historical average growth rate: Varies between 6–9% annually.
• China’s historical average growth rate: Varies between 4–5% annually.

These assumptions are simplified for the sake of this article, but they help us form a model based on the exponential growth of GDP. The formula for exponential growth is:

GDP_t = GDP_0 * (1 + g)^t

Where:

• GDP_t is the GDP at time t,
• GDP_0 is the initial GDP (2023 value),
• g is the annual growth rate, and
• t is the number of years into the future.

To find the year when India’s per capita GDP catches up with China’s, we solve the equation:

India's GDP = China's GDP

This gives us the equation

(1 + g_I)^t / (1 + g_C)^t = 6

Where g_I and g_C represent the growth rates for India and China, respectively. By solving for t, we can estimate the number of years it would take for India to catch up with China.

Scenario Analysis: The Five Scenarios

Let’s explore five different scenarios, each assuming different growth rates for India and China.

Scenario 1: A Modest Growth Advantage (India at 5%, China at 4%)

• India’s growth rate: 5% (0.05)
• China’s growth rate: 4% (0.04)

This scenario assumes that India continues to grow at a faster pace than China, but only by 1 percentage point.

• Catch-Up Time: 187 years
• Catch-Up Year: 2210

This scenario presents a fairly slow pace of convergence, where India will take nearly two centuries to catch up, assuming these growth rates persist.

Scenario 2: A Moderate Advantage (India at 7%, China at 5%)

• India’s growth rate: 7% (0.07)
• China’s growth rate: 5% (0.05)

Here, India maintains a 2 percentage point advantage over China. While the gap is still modest, this difference significantly shortens the timeline.

• Catch-Up Time: 95 years
• Catch-Up Year: 2118

With this moderate growth advantage, India would close the gap in just under a century, catching up by the year 2118.

Scenario 3: A Slight Advantage (India at 6%, China at 5%)

• India’s growth rate: 6% (0.06)
• China’s growth rate: 5% (0.05)

This scenario assumes a 1 percentage point advantage, similar to Scenario 1 but with a slightly higher growth rate for India.

• Catch-Up Time: 189 years
• Catch-Up Year: 2212

Interestingly, this scenario yields a timeline similar to Scenario 1, indicating that the precise rate of India’s growth is crucial in determining the catch-up time, even for small differences in growth rates.

Scenario 4: A Strong Advantage (India at 8%, China at 5%)

• India’s growth rate: 8% (0.08)
• China’s growth rate: 5% (0.05)

In this scenario, India grows at a rate 3 percentage points higher than China. This results in a much quicker convergence.

• Catch-Up Time: 64 years
• Catch-Up Year: 2087

With this stronger growth differential, India would catch up with China in just over 60 years. The higher the growth advantage, the shorter the catch-up period.

Scenario 5: A Significant Advantage (India at 9%, China at 5%)

• India’s growth rate: 9% (0.09)
• China’s growth rate: 5% (0.05)

This final scenario assumes India grows even faster, at 9% annually, compared to China’s 5%. This is one of the more optimistic projections.

• Catch-Up Time: 48 years
• Catch-Up Year: 2071

Under this scenario, India could close the gap in just under 50 years, potentially reaching China’s per capita GDP by the 2070s.

Key Insights and Implications

1. Growth Differentials Are Crucial: The most significant factor in determining how long it will take India to catch up with China is the difference in their growth rates. Even a small difference in growth rates can result in vastly different timelines for convergence.
2. China’s Growth Rate Is Slowing: While China has historically maintained high growth rates, its economy is beginning to slow down as it matures. If India can maintain a higher growth rate (especially with its younger population and ongoing economic reforms), it could shorten the timeline significantly.
3. The Younger Demographics Advantage: India’s demographic structure is much younger than China’s, with a larger working-age population, which could provide a natural boost to its economy in the coming decades.
4. Long-Term Projections Are Uncertain: These calculations rely on the assumption that both countries will continue growing at their historical average rates. However, many factors, such as changes in policy, technological advancements, global economic shifts, and population changes, could alter these projections.

Conclusion

India’s per capita GDP could catch up with China’s much sooner than many people expect, depending on how both economies evolve in the future. If India can maintain a higher growth rate — especially in scenarios where it grows at 8–9% annually — it could close the gap within a few decades. However, if the growth differential remains narrow, it could take well over a century.

As India continues to reform its economy and harness its demographic potential, it may indeed become a major economic force, capable of rivaling China’s per capita GDP much sooner than expected.