I had a dream, overnight. A dream which saw India as a 50 trillion dollar economy in 2047, the 100th year of our Independence. Am writing this, lying down in my bed. After all, I hate to move away from sweet dreams.
In the pursuit of significant economic growth, history provides valuable lessons. Japan's economic rise between 1970 and 1995 saw its GDP increase from $215 billion to $5.51 trillion, achieving an impressive Compound Annual Growth Rate (CAGR) of approximately 13.5%. During this period, inflation fell from 8% to 1%, and the yen appreciated considerably against the US dollar, moving from 160 to 85 USDJPY.
Likewise, China's economic liberalization under Deng Xiaoping in 1979 triggered remarkable growth.
Today, India’s GDP stands at $4 trillion. To reach the ambitious target of a $50 trillion economy by 2047—marking its 100th year of independence—India would need to sustain a CAGR of 11.6%.
Although this goal is bold, Japan and China's experiences suggest that such growth is possible with the right strategy and execution.
Key Factors for Success:
1. Comprehensive Reforms: Achieving this level of growth will necessitate wide-ranging reforms across multiple sectors, supported by strong political determination. Some reforms will succeed, while others may face setbacks, requiring flexibility and persistence. I am not getting into that debate right now, and please, do not start off with “but India has politicians, and many other challenges” etc etc. Inspite of problems of their own nature, other countries have done it. There is no reason for us not to do an encore'.
2. Econometric Viability: From a purely econometric standpoint, reaching the $50 trillion target is feasible, given historical examples of rapid economic expansion. That will require us to grow at 11.5% CAGR for the next 23 years. Impossible? Look at Japan and China, and think again.
3. Population and Per Capita GDP: With India’s population currently at 1.45 billion and growing at an annual rate of 1%, a GDP of $50 trillion by 2047 would translate into a per capita GDP of approximately $27,500—far exceeding that of many developing economies.
4. Inflation Management: Controlling inflation below 5% will be vital. The current administration's efforts over the past decade in curbing inflation are commendable, though a deeper discussion on the methods employed is needed.
5. Currency Stability: To achieve this growth, India must limit currency depreciation to less than 1% annually—significantly better than the 3.3% depreciation seen over the past decade and the 4.7% rate in the decade prior.
6. Energy and Exports: While renewable energy will reduce India’s reliance on imported oil for energy, a $50 trillion economy will still require substantial oil imports for petrochemical needs. Increasing exports, particularly in manufacturing, will be critical in balancing this demand—mirroring the export-driven growth models of Japan and China. And we are nowhere near that, at the moment.
7. Sector-Specific Reforms: While this article provides a high-level overview, in-depth discussions of necessary reforms across specific sectors are essential to charting a successful path forward.
Reaching a $50 trillion economy by 2047 presents both challenges and opportunities for India. Drawing lessons from the economic transformations of Japan and China, India can craft strategies tailored to its own context. This journey will demand sustained effort, strategic reforms, and a strong commitment to overcoming hurdles. However, the potential rewards—a more prosperous, resilient economy—are well within reach for India’s future.
