India can be the world’s second largest economy soon?
RBI deputy governor Michael Patra says that it is “possible to imagine India striking out into the next decade to become the second largest economy in the world not by 2048, but by 2031 and the largest economy of the world by 2060.”
At an address titled, ‘Future Readying India’s Monetary Policy’ at the Lal Bahadur Shastri National Academy of Administration, Mussoorie, Patra noted that the Organisation for Economic Cooperation and Development (OECD) already projects that in PPP terms, India will overtake the US by 2048 to become the second largest economy of the world. However, he sees a possibility of that happening sooner - in the next seven years!
Patra highlighted India's inherent strengths and determination to achieve its ambitious targets. He noted that the 'age of China' began in the early 1990s, propelling it to become the second-largest economy globally. However, he emphasized that India's time has arrived, starting from 2010, and several factors are converging to enable India to emerge as a world leader in the next two to three decades.
Patra is of the view that several key drivers will fuel India's growth. - Firstly, investment, traditionally supported by domestic savings, is stabilizing and showing signs of acceleration, complemented by a manageable current account deficit and external debt.
- Secondly, effective monetary policy and inflation control have achieved macroeconomic and financial stability, which underpins growth prospects. The improving health of the banking sector and ongoing fiscal consolidation further enhance stability.
- Thirdly, India's favorable demographics, characterized by a young and expanding workforce, promise sustained growth.
- Another growth multiplier is India’s digital revolution. India is emerging as a world leader in leveraging digital technologies for transformative change.
He stated that if India can achieve a growth rate of 9.6% per annum over the next decade, it is estimated that the country will break free from the lower middle-income trap and become a developed economy. "These gains need to be reflected in per capita income with two milestones – a per capita income level of US$ 4516-14,005 to reach middle income country status, and beyond that level to attain the position of a developed country today," he said.
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