Highlighting India’s economic trajectory and long-term growth potential, Arvind Panagariya, Chairman of the 16th Finance Commission, on March 1 asserted that the country’s goal of becoming a developed nation by 2047 is well within reach. He underlined that while additional reforms are necessary, India is well-positioned to sustain the required economic expansion in dollar terms at current prices.
“From 2003-24, in the last 21 years, the growth rate has been 10.1 percent in dollar terms at current prices. If we maintain this growth rate for the next 10 years, India will be a $9.5 trillion economy,” he stated. He also underscored the importance of maintaining macroeconomic stability and democratic governance as preconditions for sustained growth.
Panagariya emphasised that India needs to maintain a growth rate of 10.1 percent in dollar terms at current prices to reach the high-income threshold of $14,000 per capita income by 2047. “Per capita income of $14,000 is the threshold that India must cross to classify as a high-income country at 2023 dollar prices. The growth rate needed for per capita income growth is 7.3 percent to achieve $14,000 by 2047,” he said at the 49th Civil Accounts Day celebrations in New Delhi.
With India’s per capita income in 2023-24 standing at $2,570, Panagariya emphasised that there is substantial room for further increase, reinforcing the country’s economic growth potential in the coming decades.
He noted that the country’s population growth is expected at 0.6 percent per year till 2047, which provides a favourable environment for sustained economic expansion. “The prospects of the Viksit Bharat ambition thus remain realisable,” Panagariya added.
Taking a long-term view of the economy, Panagariya pointed out that India's high-growth trajectory began in 2003-04 when the economy started growing at 7.9 percent. Over the past 21 years, the country has recorded a growth rate of 7.8 percent in dollar terms at constant prices. However, he noted that the rupee has depreciated by over 1 percent per year during this period.
Growth Estimates
Commenting on recent GDP growth trends, Panagariya noted that estimates for the first two quarters of FY25 were tepid compared to previous quarters, but Q3 saw a significant improvement. He urged observers to take a longer-term perspective on economic performance rather than focusing on short-term fluctuations.
“If the GDP figure is low even in a quarter, the speculation begins on the aim of Viksit Bharat,” he said.
On poverty alleviation, Panagariya stated that regardless of the measurement approach, poverty has seen a significant decline over the past 21 years. “No matter how you measure poverty, during the last 21 years, it has reduced massively as a group average,” he remarked.
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