Challenges on the road to India becoming a developed nation by 2047

India will need sustained structural reforms, give more traction to the service sector, become a global manufacturing hub. (Representational image/ Reuters/File)

As per the IMF’s World Economic Outlook database, by FY28 India will overtake Germany and Japan to become the third largest economy in the world.

In the report, India’s economy is expected to reach $4.94 trillion by FY27, and grow to $5.36 trillion against Japan’s $5.17 trillion in FY28.

For anyone following India’s growth story this comes as no surprise. The more intriguing question to ask is: Will India become a developed nation by 2047, when the nation celebrates 100 years of winning its freedom from oppressive British rule.

Then And Now

The Indian subcontinent had a glorious past. According to British economic historian Angus Maddison, between 1000 AD and 1700 AD, it was the prima-donna of global economy; in 1000 AD its share of world GDP slightly more than a quarter, and between 1500 and 1700 AD, it was slightly less than a quarter. In 1700, its GDP at 24.4 percent of global economy was greater than China and Europe.

Then came British extortionist colonial rule, which decimated the subcontinent’s economy, and when British left, the economy was in tatters, and poverty loomed with a lowly Rs 265 per-capita income and GDP below Rs 2.7 lakh-crore.

Cut to Circa 2022.

Discussing India’s economic prowess, The Guardian puts it succinctly: “You won’t find mention of it in Liz Truss’s blueprint for a “modern brilliant Britain”, but the UK has just been overtaken by India as the world’s fifth biggest economy”.

Panch Pran

Delivering his Independence Day speech on August 15, Prime Minister Narendra Modi said, “…we must take up the responsibility of fulfilling all the dreams of the freedom fighters by embracing those Panch Pran by 2047 when the country celebrates 100 years of independence. The Panch Pran of Amrit Kaal- Goal of developed India, to remove any trace of colonial mindset, take pride in our roots, unity and sense of duty among citizens”.

While India has resolutely shed its ‘third world’ tag, a lot more is needed to catapult it to make it a ‘developed country’.

India, A Developed Country By 2047?

Before we move ahead, it is important to define the term ‘developed country’. The World Bank uses classifications of low income, lower-middle income, upper-middle income, and high income countries. The World Bank currently classifies India as a lower middle-income economy — a term used for countries with a gross national income (GNI) per capita of between $1,086 and $4,255. As per the World Bank's definition, a country with a per capita annual income of over $12,000 is considered higher-income nation.

This is what India aspires to become by 2047.

A developed country is characterised by relatively high level of economic growth, high living standards, and higher per-capita income as well as performing well on Human Development Index (HDI) that includes education, literacy, and health.

Five Challenges Ahead

The journey to become a developed nation by 2047 is fraught with roadblocks, and India must get past insurmountable challenges.

One: As per ‘UN State of World Population Report 2022’ in 2023 India will dethrone China, as world’s most populous country. Despite India replacing Britain as the fifth-largest economy, as per GDP metrics, its per capita GDP – of $2,466 (nominal; 2022) and $8,293 (in PPP terms; 2022) — places it at 142nd rank (nominal) and 125th ranked (PPP) globally. India is not only behind Bangladesh, but according to World Bank data, India’s per-capita GDP of $2,277 in 2021 was behind China ($12,556.3), the United States ($69,287.5) and the United Kingdom ($47,334.4). This is not the stuff that a developed country is made of.

Two: A hungry nation cannot be a developed country. As per the latest Global Hunger Index (2022), India with score of 29.4, is ranked 107th among 121 countries. Our protestations about small sample-size, and anti-India bias notwithstanding, India faring worse than Nepal, Bangladesh, Sri Lanka, Pakistan, Rwanda, Burkina Faso, and Sudan on the GHI does not bode well if India aspires to be global economic powerhouse.

Three: As per the World Inequality Report 2022, India is among the most-inequitable countries globally, with the bottom half of population earning Rs 53,610, but top 10 percent earning 20 times at Rs 11,66,520. Unsurprisingly, while the top 10 percent hold 57 percent of national income (and the top 1 percent hold 22 percent), the share of bottom 50 percent has slipped to 13 percent.

Such glaring inequality needs to be fixed at a war-footing if India has to become a developed country in next 25 years.

Four: As per UN Human Development Report (2021/2022), India ranks 132nd out of 191 countries. Instructively, the HDI measures progress on three key dimensions of human development — a long and healthy life, access to education, and a decent standard of living.

To put in perspective, India’s current HDI score (0.64) is much lower than what any of the developed countries had in 1980. China attained 0.64 level in 2004, and took another 13 years to reach 0.75, which, incidentally, was the UK’s HDI level in 1980.

India aspires to leapfrog to the status of a ‘developed nation’ piggy-backing the unprecedented demographic-dividend, but faces the danger of its demographic dividend turning into an unmitigated demographic disaster.

Five: Despite massive gains in literacy, India with about a 25 percent illiterate population, is home to world’s largest contingent of illiterate. Also, despite immense quantitative growth in education, the country is saddled with millions of unemployable educated people. India needs to eliminate illiteracy at the earliest, and focus on qualitative education. India with a high employable educated population is a precondition to becoming a developed country.

Positive Signs

India can face these challenges, and its past performance back this optimism. India’s journey from a battered and bruised economy in 1947 to the fifth-largest in 2022 inspires confidence of where India will be in 2047.

The economic headwinds crippling developed nations and faltering China’s growth augurs well for India, even if it consistently grows at a ‘new-normal’ rate of 6.5-7 percent.

Innovation will be a key in transforming India’s economy, and its progress in the Global Innovation Index 2022 from the 81^st spot in 2015 to the 40th now is a good indicator of the road ahead.

Moreover, if the Economic Advisory Council of the Prime Minister (EAC-PM)’s Competitiveness Roadmap for India @ 100’ is strictly followed, achieving $10,000 per-capita income and India becoming a $20 trillion economy by 2047 with commensurate sustainable Human Development Index improvement is eminently doable.

Conclusion

Until recently, there were many who did not believe that India could become a $5 trillion economy, and despite of two years lost to COVID-19, India will achieve that goal by FY27. Similarly, to become a ‘developed country’ India will need sustained structural reforms, give more traction to the service sector, become a global manufacturing hub, reduce human load on agriculture, make the demographic dividend deliver, usher in massive investment in health and education, broad basing the progressive tax regime, banish gender disparities, and termite corruption.

Akhileshwar Sahay is President (Advisory Services), BARSYL. Views are personal, and do not represent the stand of this publication.