India can be developed economy by 2047, achieve per capita income of $14000

On the ongoing trade war, triggered by US, Panagariya said that there is tremendous opportunity for India in the trade sphere. India’s share in the global economy in terms of goods’ exports in merely 2%, and services is 4%, noted the finance commission chief.

India can achieve its aspiration of becoming a developed country by 2047, and may achieve a per-capita income of $14,000 by that year, said Arvind Panagariya, chairman, 16th finance commission of Friday. “I believe it’s possible. Despite the gloom, we can maintain a high growth rate,” said Panagariya at ICPP Growth Conference in New Delhi.

According to the World Bank definition of a developed country, the per capita income (PCI) of individuals have to be $14,000 (in nominal terms). In FY24, the PCI was $2,570. PCI is calculated as the ratio of gross national income and population, in any given year.

“To be a developed economy, our overall GNI must grow at 7.8% every year— even as population growth slows to just 0.5%,” said Panagariya.

He noted India’s resilience through multiple economic shocks: “From 2003–04 to 2019–20, India clocked an impressive 9% average growth in real dollar terms. Even after factoring in COVID, India grew at 7.8% annually over a 21-year stretch,” said Panagariya.

Panagariya highlighted that India has weathered three big shocks — the global financial crisis, COVID, and a banking collapse — and still grew steadily. “Despite massive NPAs and an NBFC crisis, the Indian economy held its ground with strong momentum,” said Panagariya.

Trade Opportunity

On the ongoing trade war, triggered by US, Panagariya said that there is tremendous opportunity for India in the trade sphere. India’s share in the global economy in terms of goods’ exports in merely 2%, and services is 4%, noted the finance commission chief.

He said that free trade has a major effect on growth, it rather acts as a “growth multiplier”. “Some challenges are looming on the trade side; where this will end up we will know in 3 months. But we will come out stronger from this,” said Panagariya.

He said the China-US trade conflict is “here to stay” and not limited to any one administration. “It’s not because of Trump — there has been a long history of this in the US that China has operated unfairly,” he added.

Due to restrictions on imports from China, Vietnam, and Cambodia, Panagariya sees an opportunity for India. “If India successfully negotiates with the US, it will open the door for negotiations with Europe too. The US trade deal will favour India.”