Business · India Bureau
India needs bold push in education, health to avoid middle-income stagnation
Renowned French economist Thomas Piketty argues that India can break free from the middle-income trap through substantial investments in human capital and infrastructure. Global coalition participation is equally critical for achieving sustainable, inclusive growth, he said.
LSN India ·
India faces a critical juncture in its economic trajectory, with renowned economist Thomas Piketty warning that without decisive action, the country risks falling into the middle-income trap—a scenario where rising wages undercut competitiveness in labour-intensive sectors while insufficient productivity hampers advances in higher value-added industries.
The middle-income trap typically manifests in slowing growth rates, stagnant or declining wages, and an expanding informal economy. Several emerging economies have struggled with this phenomenon, experiencing difficulty in transitioning from lower to upper-middle income status.
Piketty, a leading expert on inequality and economic development, outlined a clear pathway for India to avoid this fate. "India can escape the middle-income trap, but this will require massive investment in education, health and infrastructure," he said in an interview. Beyond domestic policy reforms, he stressed that India's participation in global coalitions and international frameworks is essential for driving the inclusive and sustainable growth needed to sustain prosperity.
The remarks underscore the interconnected nature of modern economic development, where domestic policy choices must be complemented by strategic international engagement and collaborative frameworks to ensure long-term competitiveness and broad-based advancement.