Last week, Montek Singh Ahluwalia, the former deputy chairman of the Planning Commission, delivered a compelling lecture in Hyderabad on India’s economic future. He emphasized the growing challenge of transforming India into a developed economy by 2047—a vision known as “Viksit Bharat” under Prime Minister Narendra Modi.
Ahluwalia pointed out that India has averaged a 6.5% economic growth over the past 25 years. To reach the “Viksit” status, we need to boost this average to 8% annually for the next two decades. This isn’t an easy feat. Our past growth has been marked by peaks above 8% some years, particularly during the first term of Manmohan Singh’s government, and valleys around 5% in others, especially post-demonetization and during the COVID-19 lockdown.
To achieve an average of 8% over the next twenty years, there must be years of growth at least at 10% to offset any downturns. For India to realize this ambitious goal, other states must emulate the impressive growth seen in places like Telangana and Tamil Nadu.
After the pandemic, I published a collection of essays to gauge economic forecasts for the 2020–2030 period. Responses from my Twitter followers and prominent economists varied widely. While 39% of my followers optimisticly predicted growth around 7%, professional economists had forecasts ranging from a pessimistic 3.5% to a more hopeful 6.5%.
Five years after the pandemic, we seem to have settled into a “new normal” of around 6.5% growth. Much of this recovery has been fueled by public investment. However, the private sector must now take the wheel for sustainable growth. Despite calls for enhanced business conditions, it’s still unclear whether the entrepreneurial spirit of the ’90s has been reignited.
Historically, from 1950 to 1980, India’s economy grew at just 3.5% per year. That number crept up to 5.5% between 1980 and 2000, and then surged to about 8% in the 2003-2020 period. This growth was largely attributed to gains in the services and manufacturing sectors, alongside a rise in foreign trade.
The early 2000s captured the world’s attention, with many books celebrating India’s potential. Even leaders like Lee Kuan Yew acknowledged India as a rising power. However, after the 2008 financial crisis, China sprinted ahead while India’s growth has been more uneven.
Currently, we face a more challenging global environment. The demand for Indian goods and services isn’t as robust as it once was. Plus, the entrepreneurial spirit that drove India’s post-1991 growth has dimmed, despite efforts to improve the business climate.
For real progress, we need two things: a boost in domestic demand and a tangible improvement in the business landscape. Politically, leaders must confront reality rather than mask issues and focus on a comprehensive strategy to elevate economic growth and equity, as highlighted in Modi’s Independence Day speech for 2024.
In summary, while the path to a developed India by 2047 is fraught with challenges, an unwavering commitment to growth and reform can steer us in the right direction.
Author: Sanjaya Baru, economist and writer. His recent book explores New India’s challenges.
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Montek Singh Ahluwalia, planning commission, Viksit Bharat, Dr manmohan singh, covid lockdown, narendra modi,
