Understanding the World Bank's Country Income Classification
UPSC Relevance
Prelims: Indian Economy (Gross National Income - GNI vs. Gross Domestic Product - GDP, Income classifications, World Bank).
Mains:
GS Paper 3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. (India's goal to become a high-income country by 2047 makes this classification the benchmark for its progress).
Key Highlights from the News
The World Bank classifies countries annually based on their income.
This classification is based on Gross National Income per capita (GNI per capita), which measures the average income of a country's citizens.
There are four main categories: low-income, lower-middle-income, upper-middle-income, and high-income.
This is an absolute classification, meaning each country is compared to a predetermined income threshold, not to other countries.
These income thresholds are updated annually to account for global inflation.
Over time, most countries in the world have moved into higher income categories. The proportion of the world's population living in low-income countries has decreased from 37% in 2004 to less than 10% today.
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