ChatGPT On Viksit Bharat
Here’s what I asked ChatGPT the other day: “Please give me the best estimate for the GDP of the US, China and India in 2050 at their average annual economic growth rates of, respectively, two per cent, three per cent and eight per cent.”
This is ChatGPT’s reply: “To estimate the GDP of the US, China and India in 2050 based on different annual growth rates, we can use the compound interest formula: A = P(1+r)n. Where:
A = the future value of investment/asset
P = the present value of investment/asset
r = annual growth rate (as a decimal)
n = number of years
Using this formula:
AUS= 22X (1 + 0.02)28
AUS͌ 39.79 trillion USD
AChina= 17X (1 + 0.03)28
AChina ͌ 41.79 trillion USD
A India= 3 X (1 + 0.08)28
A India ͌ 35.02 trillion USD
Don’t be put off by the arcane equations ChatGPT uses to calculate the GDP numbers. Consider its final estimate. By 2050, according to ChatGPT, China’s GDP will be $41.79 trillion. US GDP that year will be $39.79 trillion. India’s GDP in 2050 will be $35.02 trillion.
A caveat: for all its numerical capability, ChatGPT mistakenly takes calendar 2022 as the starting point. Thus the GDP figures for the US and India are understated at $22 trillion and $3 trillion respectively.
That aside, ChatGPT’s numbers are basically in line with what several global financial institutions have estimated. One can argue about projected annual growth rates (increase America’s a bit, cut ageing China’s a little, moderate India’s a fraction). It won’t change the overall outcome much. The GDP of the three major global economies – the US, China and India – are likely to be bunched up on either side of $40 trillion in 2050.
Viksit Bharat is due in 2047, the centenary of India’s independence. So let’s see what a GDP of around $35 trillion will mean for development. India’s population will plateau at 1.5 billion, with fertility rates having stabilised below replacement levels of 2.1 children per woman. At a GDP of $35 trillion and a population of 1.5 billion, India’s per capita income in 2050 will be approximately $23,300. For comparison, China’s per capita income in 2023 was roughly $12,000 (population: 1.4 billion; GDP $17 trillion).
Thus India would have risen from a low-income country in 2023 with a per capita income below $3,000 to a high middle-income country with a per capita income of over $23,000 – an increase of nearly 8x in 27 years. The fly in the ointment of course is the annual growth rate estimated at eight per cent. This is India’s likely growth rate in 2023-24. But is it sustainable over a long period? There are diverse views. India’s chief economic advisor (CEA) Dr. V. Anantha Nageswaran believes the eight per cent rate is sustainable. So does former CEA Krishnamurthy Subramanian, currently India director at the International Monetary Fund (IMF).
Chetan Ahya, chief Asia economist of Morgan Stanley, disagrees. He told Bloomberg Television in an interview on March 18, 2024 that “India’s economy will grow steadily at 6.5-7 per cent over the long term but is unlikely to achieve the 8-10 per cent economic growth rates that China pulled off over three decades.”
Potential underestimated
Foreign institutions have long underestimated India’s growth potential. The IMF, World Bank and Goldman Sachs have all been forced to raise their forecasts for India’s GDP growth in FY24 to seven per cent. They also miscalculated India’s current account deficit (CAD) at 1.5-2.0 per cent. Most international institutions have now conceded that CAD in FY24 will in fact fall to less than one per cent of GDP.
Exports have surged despite the Russia-Ukraine war, disruptions of trade in the Red Sea and the tightening squeeze on sanctioned Russian crude oil shipments to India. In February 2024, the overall deficit in merchandise and services trade plunged to a paltry $2.15 billion. The surplus in services trade ($16.56 billion) made up for almost the entire deficit in merchandise trade ($18.71 billion).
At this run rate, the trade deficit in 2024-25 could fall to $40-50 billion. With net remittances staying strong at $105 billion, India’s balance of payments (BoP) in FY25 will be firmly in the black. Commerce Minister Piyush Goyal expects overall trade in 2023-24 to be close to $780-$800 billion. Total trade of $1 trillion is now a reasonable target for 2026-27.
Long-term projections obviously come with health warnings. India has survived Black Swan events like Covid and transcontinental wars. The pandemic cost India two years of growth. Are there any Black Swan events on the horizon? China’s invasion of Taiwan would count as one. It could disrupt global supply chains, including vital semiconductor chips that run everything from electric cars and passenger aircraft to mobile phones and power grids.
But an assault on Taiwan is unlikely in the immediate future. China has serious economic and demographic problems to deal with before getting embroiled in a war it may not win easily as the Russian invasion of Ukraine has shown.
Let’s return to what ChatGPT concluded in its answer to my question on the estimated GDP of the US, China and India in 2050: “These are estimates and may vary on various economic factors and assumptions.”
Like humans, artificial intelligence (AI), hedges its bets.
