“I have an unwavering belief that in 2047, when the country celebrates 100 years of independence, my country will be a developed India.”
Thus did Narendra Modi, India’s prime minister, address his country on Independence Day 2023. Is his aspiration a feasible one? Yes. Is it a plausible one? No. But it is still likely that India will be a superpower by that time, with an economy, on one measure, as large as that of the US. So, how might India get there? What challenges will it face? What might it mean for the world?
I addressed the topic of India’s economic future in lectures last week at the National Council of Applied Economic Research and the Consumer Unity and Trust Society in New Delhi. I illustrated the challenge of becoming a high-income country by comparing India with the poorest country ranked as “advanced” by the IMF, Greece. In 2023, India’s GDP per head at purchasing power parity (PPP) was just under a quarter of that of Greece. If Greek GDP per head grows at a mere 0.6 per cent (its 1990-2029 trend, with IMF forecasts) and India’s grows at 4.8 per cent (its 1990-2029 trend), India’s GDP per head would only be 60 per cent of Greece’s in 2047. If its GDP per head were to match that of Greece by 2047, the rate of growth in GDP per head would need to rise to 7.5 per cent a year. That rate of growth would not be far below that of China from 1990 to 2012, when it achieved the astounding annual rate of 9 per cent. (See charts.)