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As per the 2020-21 World Bank’s Country Classification based on Income level, Nepal’s economy has moved to a higher category to become a Lower-middle Income economy while Sri Lanka’s economy has moved to a lower category to become a Lower-middle Income economy.
Every year, the World Bank classifies countries into four income groups- (i) Low (ii) Lower-Middle (iii) Upper-Middle (iv) High Income. This classification of the economies of countries across the world is updated on the 1st of July every year by the World Bank. The classification of a country is done by using the Atlas Method by the World Bank. World Bank is using the Atlas Method since 1993 to estimate the size of an economy. Under the Atlas Method, Gross National Income (GNI) of a country is converted into the current U.S. Dollars.
As per the 2020 Classification, India remains a Lower-Middle Income country.
Nepal
2 years back, on 22nd May 2018, the Nepal Government announced that within the upcoming 10 years, its target will be to become a Lower-middle income country. Nepal achieved the target of becoming a Lower-Income country well ahead of its plans.
For becoming a Lower Middle-Income country, the World Bank has set the GNI per capita to be between USD 1036 to USD 4045. Nepal marginally crossed the line as its GNI in 2019 was USD 1090.
Sri Lanka
For becoming an Upper-Middle Income country, GNI per capita to be between USD 4046 to USD 12,535. Sri Lanka becomes a Lower-Middle Income country from an Upper-Middle Income country as its GNI per capita in 2019 was marginally short of the minimum of USD 4046 required to become an Upper Middle Income Country. USD 4020 was Sri Lanka’s GNI per capita in 2019.