PTI

New Delhi, May 4: Continued rise in business productivity and competitiveness of Indian economy is likely to inflate incomes in the country by almost three times over the next two decades, according to a latest McKinsey study.

The rising income levels would lift 291 million people out of poverty and create a 583 million strong middle class in the next two decades, a report from McKinsey Global Institute reveals.

If India maintains the growth momentum over the next 20 years, income levels would almost triple, it added.

"Average real household disposable income will grow to Rs 3,18,896 per annum by 2025 from Rs 1,13,744 in 2005," the global consultancy firm said.

McKinsey is optimistic about India's economic growth rate and forecasts a real compound annual growth of 7.3 per cent from 2005-2025, a marked acceleration from the 6 per cent growth of the previous two decades.

"We believe the optimism is justified because of the substantial scope for continued productivity increases in Indian businesses, growing openness and competitiveness of the Indian economy and favourable demographic trends," it said.

The study titled 'The Bird of Gold' shows that India's rising income has already made a significant impact on poverty reduction.

In 1985, 93 per cent of the population had an annual household income of less than Rs 90,000 a year which dropped by about two-fifth to 54 per cent in 2005.

More than 103 million people have moved out of desperate poverty in the course of one generation in urban and rural areas as well.