Opportunities And Challenges Up Ahead On The Road To $30 Trillion By 2047

As India eyes its centenary of independence in 2047, the vision of transitioning from a developing to a developed economy is both a challenge and an opportunity. With a diverse and dynamic economic landscape, it must leverage its strengths while addressing significant challenges to achieve this goal. Going forward, the infrastructure investment requirement is expected to grow sharply. As per CareEdge Ratings, India will require an additional infrastructure investment of $18-20 trillion in the next 25 years when it becomes a $25-30 trillion economy by 2047. Currently, more than 70 per cent of the funding for infrastructure projects comes from the central government and the public sector. The country’s population, which is approximately 1.4 billion now, is expected to scale up to 1.64 billion by 2048 and decrease to 1.45 billion by 2100. As a result, India will face the challenges associated with an aging population, including increasing healthcare expenses, growing pension obligations, and potential labor shortages. To avoid the middle-income trap, the country needs a market-led economy that supports private enterprise with minimal government interference.

The focus should be on enhancing the ‘ease of doing business’ and continuing economic reforms. As per the World Bank’s World Development Report 2024, the policies need to move to ‘3i’ strategy- investment, infusion, and innovation to skip middle income trap. India is currently estimated to be the fifth largest economy with a GDP of $3.7 trillion. Several estimates show that the GDP is expected to overtake Japan and Germany by 2030. According to ratings agency S&P, nominal GDP will rise from $3.4 trillion in 2022 to $7.3 trillion by 2030. The economy will need to post an annual average economic growth of 9.2 per cent between 2030 and 2040, 8.8 per cent between 2040 and 2047 and nine per cent between 2030 and 2047. However, it is essential to note that the budget for the fiscal year 2024-25 assumes a more conservative real GDP growth of 6.5-7 per cent. IMF’s historical data shows that India took six decades (1947 to 2007) to cross the one trillion-dollar GDP mark in 2007 ($1.2 trillion).

In contrast, it took just seven years to become a $two trillion economy in 2014. It added another $1.2 trillion by 2021. If India hits the IMF’s projected figure of $5.2 trillion by 2027, it would be adding $two trillion in just six years. The country’s high-growth years of 2000-10 were led by an IT services boom that spawned an affluent middle-class. However, 46 per cent of our labour force remains in agriculture. It is characterised by low productivity and under-employment, contributing just 18 per cent of our GDP. Economic growth of South Korea, Taiwan, Japan, and Vietnam (called the ‘Asian Tigers) with low-skilled, employment-intensive manufacturing with a strong focus on exports regularly achieved double-digit growth between 1960 and 1990. Economic policy, focused on rapid export-oriented industrialization. It was premised that rise in exports require focusing on the advantages while being receptive to imports in other areas.