India's High-Income Goal by 2047 Under Modi Unlikely, Says Expert

Prime Minister Narendra Modi's ambition for India to become a high-income economy by 2047 seems improbable, according to Financial Times chief economics commentator Martin Wolf. However, he believes India will likely achieve upper middle-income status by then. Wolf shared these insights at an event organised by CUTS.

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India, currently the world's fifth-largest economy, is classified as a developing nation. A developed country typically exhibits high economic growth, a good standard of living, higher per capita income, and strong performance on the Human Development Index (HDI), which includes education, literacy, and health metrics. At independence in 1947, India was considered a third-world country.

India's Economic Prospects

Wolf noted that the current global environment is slow-growing, shock-prone, and fragile, making India's rise challenging. He emphasised that India must work hard to shape the world in its favour and exploit available opportunities. "India will have to work hard to use its influence to shape that world in a favourable direction," he said.

He also highlighted that India could become the second-largest economy by 2047, behind China and ahead of the US when measured by purchasing power parity (PPP). Prime Minister Modi expressed his belief in India's future development during his Independence Day speech last year: "I have an unwavering belief that in 2047, when the country celebrates 100 years of independence, my country will be a developed India."

Strategic Economic Relations

Wolf suggested that India could partially replace China as a competitive global supplier of goods and services if it tries. He also mentioned that India could attract significant foreign direct investment. "It can become a magnet for foreign direct investment," he stated.

Additionally, Wolf pointed out India's substantial assets in shaping global dynamics to its advantage. He remarked that India is strategically important to the West and has good relations with Western countries. "India has good relations with the West, to which it is strategically important," he added.

Trade and Governance

Wolf stressed the need for India to increase its trade-to-GDP ratio. Speaking at the same event, Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal noted that India's population growth rate is slowing rapidly. This means per capita income is now almost identical to GDP growth. "We will enter into an era of cheap capital," Sanyal said.

Sanyal also mentioned that India has recently signed a free trade agreement (FTA) with Australia and will soon sign another FTA with the United Kingdom. Montek Singh Ahluwalia, former deputy chairman of the Planning Commission, discussed the importance of good governance and a robust policy framework.

Ahluwalia remarked that India is in a favourable position compared to China due to global uncertainty and shifting policies. He suggested that India could capitalise on this advantage by realigning FTA standards. "India can cash in on its advantage by realigning FTA standards," Ahluwalia remarked.

In conclusion, while achieving high-income status by 2047 may be unlikely for India, becoming an upper middle-income nation appears feasible. The country must navigate global challenges and leverage its strategic relationships and economic opportunities effectively.