The size of the Indian economy will increase to around $20 trillion by 2047 from the current around $3.5 trillion, while the per capita income is expected to reach $10,000 when India celebrates 100 years of its independence, Bibek Debroy, Chairman, Economic Advisory Council to the Prime Minister, said on Wednesday.
“In 2047 India will have a per capita income of the value of today’s dollars of $10,000. The average size of the GDP will be approaching close to $20 trillion too,” Debroy said while virtually addressing the inaugural session at the 57th Annual Conference of the Indian Econometric Society (TIES) held at the University of Hyderabad.
Prime Minister Narendra Modi government has set a target to make India a developed nation by 2047. However, there is no specific target set for per capita income or the size of the economy.
However, the much-hyped $5 trillion dollar economy target by the year 2024 is unlikely to be met.
“Economic indicators after the Covid-19 have improved in India. Everyone is now looking to see the rate of growth in 2023-24 and the growth of the economy by 2047. The pandemic may have passed but still there is a lot of uncertainty around the world,” Debroy said.
“There is uncertainty around what is happening in China, about the Russia-Ukraine conflict, growth prospects in Europe and the USA. Since India is not insulated, we will also face volatility, Forex markets and capital markets and exchange rates will face volatility. Inflation rates will also be impacted by some uncertainty,” he added.
The Chairman of the Economic Advisory Council to the Prime Minister pointed out that there are four sources of growth – consumption, private investment, government expenditure and net exports.
“The global market is not going to be rosy. We tend to forget that when India did 9 per cent growth, our exports performed quite well. The net GDP ratio is also very high,” he said.
Debroy made a reference to a Goldman Sachs report which had contemplated the rate of growth for India at 5.5 per cent. “Today when India does 5.5 per cent, there is despair all around. Just to illustrate how aspirations have changed. However, with 5.5 per cent growth, there has been an exponential rise in the per capita income,” he said.
“The question which remains for all of us as researchers is what does India need to do to raise the growth rate from 7 per cent to 8 per cent. A lot more research needs to be done at the level of the states,” Debroy said.
“Different states are at different levels of development and hence, the sources of growth will also be different. But the fact of the matter is that to raise the growth trajectory, we need to make land markets more efficient. Agriculture will also vastly improve when we make land markets more efficient. Similarly, we need to make the labour markets and capital markets also more efficient,” Debroy added.