Opinion | India's Growth Story And A Vision For 2047

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India will mark 100 years of independence in 2047. Reflecting on the journey from 1947 to 2021, the celebrations of the 75th Independence anniversary, termed Azadi Ka Amrit Mahotsav, set the tone for a future-focused India. The events that spanned from March 12, 2021, to August 15, 2023, were a prelude to the ambitious goals envisioned for 2047.

In his address from the Red Fort on August 15, 2021, Prime Minister Narendra Modi invoked the words of Swami Vivekananda from his speech “The Future of India”, where he spoke of drawing strength from India's rich history to build a future of unparalleled greatness. Vivekananda's words, “Drink deep of the eternal fountains that are behind, and after that, look forward, march forward and make India brighter, greater, much higher than she ever was”, resonate with the ethos of India's journey towards its centenary of independence.

Predicting the exact state of India in 2047 is challenging, yet certain trends and aspirations can be projected based on current trajectories and indicators like GDP, per capita income, and other broader economic metrics.

The gross domestic product (GDP) remains a critical, albeit imperfect, measure of economic progress. As of 2024, India's per capita income stands at approximately $2,700, with the purchasing power parity (PPP) per capita income around $10,120. The aggregate size of India's GDP is about $3.9 trillion (official exchange rates) and around $14.6 trillion. These figures underline India's substantial economic footprint.

The Economic Survey of 2018-19 articulated a vision for India to become a $5 trillion economy by 2024-25, necessitating a real annual GDP growth rate of 8% alongside 4% inflation. The COVID-19 pandemic disrupted this trajectory, effectively setting back India's economic progress by two years. Nonetheless, the aspirations remain, with a focus on achieving sustainable and inclusive growth.

Looking ahead to 2047, several economic and developmental projections can be made. By that year, India's per capita income is expected to reach at least $10,000, with the economy's size approaching or exceeding $20 trillion. Such growth will likely transition India from a lower-middle-income country to an upper-middle-income category, nearing high-income status. It will also bring about significant socio-economic changes, including a sharp decline in poverty levels and a substantial rise in human development indicators.

By 2047, India aims to transition from its current medium human development category, with an HDI value of 0.645, to a high human development category. As of 2024, India's life expectancy is 70.8 years, the mean years of schooling is 6.5 years, and the GNI per capita (PPP) stands at $10,120. By 2047, projections indicate life expectancy will exceed 78 years, mean years of schooling will rise to over 10 years, and GNI per capita (PPP) will surpass $20,000. This progress will be driven by advancements in healthcare, educational reforms, and economic policies promoting industrialisation and the growth of the digital economy. Higher human development will reflect improved quality of life, attract foreign investment, and strengthen social equity, aligning with Sustainable Development Goals (SDGs). Strategic investments in healthcare, education, and economic diversification, alongside effective governance, will be critical to achieving these targets, positioning India as a major global player with robust economic growth and social development.

Achieving this vision requires a comprehensive growth agenda that integrates development indicators with economic growth measures. Several key strategies will be instrumental in this journey.

Tax reforms will be pivotal in propelling India towards its 2047 vision. A streamlined GST system that encompasses all goods and services, including traditionally exempted sectors such as petroleum, real estate, and alcohol, will significantly enhance economic efficiency. Implementing stable and predictable GST rates, ideally consolidated into three primary rates (6%, 12%, and 18%), will reduce compliance costs and curb unnecessary classification disputes and litigation. On the direct tax front, eliminating exemptions and broadening the tax base will enhance equity and compliance. This reform will prevent tax avoidance and ensure that all income categories contribute fairly to the national revenue, which is crucial for funding public services and infrastructure. Additionally, integrating personal and corporate taxation under a simplified, exemption-free regime will reduce complexities and litigation, fostering a more transparent and efficient tax environment. These comprehensive tax reforms are essential for increasing the tax-to-GDP ratio from the current 18% to a targeted 23%, providing the government with the necessary resources to invest in public goods and services, ultimately driving sustainable economic growth and social development.

 Investment and export growth are critical for India's economic trajectory. Sustaining high investment rates, particularly in the private sector, is essential for driving economic expansion. As of 2024, India's gross fixed capital formation is approximately 28% of GDP, with private investment playing a significant role. Enhancing productivity, currently growing at about 5% annually, and leveraging the demographic dividend—where 62% of the population is in the working-age group—will further fuel this growth. However, this demographic advantage will begin to diminish post-2035, necessitating urgent action to maximise current opportunities. Increasing exports, which contribute around 20% to the GDP, is also vital. Policies focused on improving infrastructure, easing business regulations, and entering into beneficial trade agreements are expected to boost exports and attract foreign direct investment (FDI), currently standing at approximately $60 billion annually.

Labour market reforms are also essential for driving productivity. As of 2024, India's labour force participation rate stands at approximately 46%, with female participation significantly lower at 23%. Increasing overall participation, particularly among women, is vital for harnessing the full potential of the workforce. Implementing skill development programs is crucial, given that 53% of the workforce lacks formal skill training. Formalizing the informal sector, which constitutes about 80% of employment, will improve job security and productivity. Efficient intermediation between labour supply and demand through technology-driven platforms can match skills with market needs, reducing unemployment and underemployment rates. By addressing these areas, India can improve its labour productivity growth from the current 5% annually to higher levels, contributing significantly to economic expansion.

Urbanisation and decentralisation are pivotal for sustainable development in India. With an urbanisation rate of 34% as of 2024, India's cities are rapidly expanding. Efficient urban governance is necessary to manage this growth. Modernising land records through digital cadastral surveys will ensure transparent land use and reduce disputes. Streamlined land use policies will facilitate better planning and development. Empowering local governments is crucial.

Enhancing public expenditure efficiency is vital for maximising resource utilisation and achieving sustainable development. As of 2024, public expenditure accounts for approximately 27% of India's GDP. Prioritising expenditure based on clear cases of market failure and focusing on essential infrastructure and social services, such as health and education, will ensure better outcomes. Establishing a Public Expenditure Council, akin to the GST Council, can coordinate and rationalise spending across different government levels, enhancing effectiveness and reducing redundancies. Such a council would evaluate and prioritise expenditure programmes, ensuring that resources are allocated to the most impactful areas. This strategic allocation can improve infrastructure, with a current focus on projects like the Bharatmala and Sagarmala initiatives, and social services, ensuring broader access and quality. These measures will enhance the efficiency of public spending, contributing to higher economic growth and improved social indicators.

Privatisation and market reforms are essential for fostering a competitive economic environment. Implementing the New Public Sector Enterprise (PSE) Policy, which aims to reduce the number of sectors reserved for state enterprises to four, will drive efficiency and innovation. The current weighted average of MFN-applied tariff rates on manufactured products stands at 6.8%; rationalising import duties and reducing tariffs will enhance competitiveness. Lowering tariff barriers, particularly for raw materials and intermediate goods, will reduce production costs and boost exports. Privatising non-strategic PSEs will increase efficiency in sectors like telecommunications and aviation. Rationalising the number of sectors and focusing on critical areas such as defence and infrastructure will protect strategic interests while promoting private sector growth. These reforms are expected to attract greater FDI.

India's journey towards 2047 is one of transformation and opportunity. By embracing comprehensive reforms, fostering inclusive growth, and leveraging its demographic and economic potential, India can realise its vision of a prosperous, developed nation that celebrates 100 years of independence with pride and progress.

(Bibek Debroy is Chairman, Economic Advisory Council to the Prime Minister. Aditya Sinha is Officer on Special Duty, Research, Economic Advisory Council to the Prime Minister) 

Disclaimer: These are the personal opinions of the author