In a recent lecture at Hyderabad’s Centre for Economic and Social Studies, economist Montek Singh Ahluwalia discussed India’s growth challenge. To achieve the goal of a developed nation by 2047—a vision termed “Viksit Bharat” by Prime Minister Narendra Modi—India needs to increase its economic growth rate from an average of 6.5% to 8% over the next two decades.
Achieving this growth rate isn’t simple. The current 6.5% has been buoyed by years of over 8% growth and periods of lower growth, especially following demonetization and the COVID-19 lockdowns. To reach an average of 8%, India will need robust growth years, potentially surpassing 10% in some instances.
Post-pandemic, many economists provided forecasts for India’s economic trajectory from 2020 to 2030. A mix of optimism and caution emerged from their views; while 39% predicted around 7% growth, others offered much lower estimates. Five years later, it’s clear the 6.5% rate might be our “new normal.” Much of the recent recovery has been driven by government investment, but the private sector’s involvement is crucial for sustainable growth.
Historically, India’s economy grew at a modest 3.5% from 1950 to 1980, rising to 5.5% from 1980 to 2000. During 2003-2020, it accelerated to around 8%, largely due to advancements in services and manufacturing. However, after the financial crisis of 2008, growth has slowed again, raising questions about India’s position globally, especially in comparison to China.
Today, the global economic landscape is more challenging. India’s exports have dwindled, and the demand for its goods and services has decreased. Moreover, the “animal spirits” that once fueled growth seem dampened, despite government efforts to improve the business climate.
To revive growth, two main conditions must be met: consumer demand must increase, and businesses need to genuinely feel the improvements in the ease of doing business. Additionally, India’s leaders must address these issues head-on, rather than pretending everything is fine.
Overall, transforming India into a developed economy by 2047 will require a focused effort across the board—economic strategies that prioritize not just growth but also income distribution and a higher quality of life for all citizens.
For more insights on India’s economic landscape, you can check the World Bank Report on India.
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Montek Singh Ahluwalia, planning commission, Viksit Bharat, Dr manmohan singh, covid lockdown, narendra modi,
