Developed India By 2047?
Prime Minister Narendra Modi has set an ambitious target of making India a developed nation by 2047, the centenary of Indian Independence. The key question: what defines a developed nation? Take quantitative criteria first. A developed country should have a per capita income of at least $12,500 at market exchange rates. India’s current per capita income is just above $2,500. To raise that five times between 2023 and 2047 will need an average annual GDP growth rate of seven per cent. This is hard but doable.
Simultaneously, there must be an improvement across qualitative health parameters. Nutrition levels must go up, hunger levels must go down. Inequalities in incomes must reduce. Average life expectancy should rise from the current 70 years to 80 years, the gold standard in developed nations today.
Education comes next. India’s large demographic base of young people needs to get better primary and secondary education and develop vocational skills. India’s higher education, however, has improved significantly. The new education policy (NEP) allows students to mix subjects between science and humanities. This will produce more rounded adults with better job prospects.
A key qualitative measure to make India a developed nation is social cohesion. Caste and religion should be made irrelevant in public life and discourse. The criminal justice system requires an overhaul to enable it to deliver fairer and faster justice.
If these quantitative and qualitative criteria are met, India can conceivably emerge as a fully developed nation by 2047. If it does, it will be a unique achievement for two reasons.
First, India was an impoverished nation at Independence in 1947 with a per capita income of $60. Few gave it a chance to succeed as a democracy without balkanising, torn apart by religious, caste and linguistic differences. That hasn’t happened for 76 years and is unlikely to in the next 24 years.
Second, while other former colonies like Malaysia, Singapore and Indonesia have since their independence achieved a higher per capita income than India and better health parameters, India’s size distorts the comparison. India is the elephant in the race. The others are hares. They make it to the finish line first. But when India lumbers up, the difference in size and scale will be noticeable.
As a diverse, noisy, combative democracy, India’s economy is often held hostage to politics. Other developing counties in Asia, Africa and South America have slipped in and out of democracy into military dictatorships after independence from colonial rule. India, with the singular exception of the 1975-77 Emergency has been a democracy with all the warts that go with it, including parliamentary disruptions and a coarsening political discourse. Throughout, however, as recent state assembly elections in Karnataka and Himachal Pradesh underscored, the transfer of power is peaceful and prompt.
Behind these macro numbers lie important micro-figures that point to a better outcome for India in the coming decades than many estimate. One of the key numbers that affect GDP growth – and, given a largely stable population, per capita income growth as well – is gross domestic savings. Higher gross savings feed into the economy through higher consumption and retail investment.
The two form a virtuous cycle. Increasing levels of consumption drive economic growth. Retail investment in turn helps the corporate sector to invest more in the broader economy. With government capex rising sharply, private investment is primed to pick up in 2023-24.
The potential for gross domestic savings growing rapidly in India is evident. Akash Prakash, CEO of Amansa Capital, addressed the question recently in an op-ed in Business Standard: “I had the privilege of attending a presentation by Raamdeo Agrawal at his conference recently. He shared some interesting statistics and thoughts on the retail equity revolution in India. It was a fascinating presentation, leading me to ponder the implications of implementing tidal wave of savings.
“Raamdeo highlighted that over the past 25 years, India had built up gross domestic savings of approximately $12 trillion. Over the coming 25 years, this number is expected to surge to over $100 trillion. As our dependence on foreign capital reduces, the days of structural rupee depreciation may also be coming to an end. Lower and less volatile inflation in India, a weaker dollar and productivity gains in the domestic economy should combine to be less of a drag on returns for dollar-based investors.”
With financial resources flowing into the broader economy, average annual GDP growth at seven per cent will be well within reach. That is the key number for India in order to achieve upper-middle income status by 2047, eliminating poverty and mitigating inequality.
What about the qualitative criteria? India’s female labour force participation rate is 24 per cent as per the World Bank’s 2021-22 figures. This compares with the US female labour force participation rate of 56.5 per cent. India has much ground to cover.
India’s malnutrition rate is a high 16.3 per cent against 2.5 per cent in the US. Infant mortality in India is 25.5 per thousand births. In the US, it is 5.4 per thousand births.
As per capita income rises after two centuries of colonial-led impoverishment and 40 years of post-independence annual GDP growth of three per cent due to misguided socialist economic policies, India’s health, nutrition and infant mortality parameters will obviously improve.
Dhiraj Nim, an economist with ANZ Research, wrote in The Economic Times: “Thanks to fortuitous global developments and timely policy action, India has embarked from a lackluster economic future to a more exciting one. However, to reach its enormous economic potential, India must undertake deeper reforms to alleviate structural constraints in the labour market and those afflicting firm-level productivity.”
If those reforms take place, quickly and efficiently, India’s development target for 2047 will be met.
The writer is the biographer of Rajiv Gandhi and Aditya Birla and author of The New Clash of Civilizations (Rupa 2014). He is founder of Sterling Newspapers Pvt. Ltd, which was acquired by the Indian Express Group
