India aims to become a developed economy by 2047 but faces significant obstacles, with growth rates needed to reach this goal untested in its history, amid structural constraints and comparisons with China’s economic journey.
India’s ambition to become a developed economy by 2047 rests on a growth path that history says will be difficult to sustain. Ashok Lahiri, vice-chairman of NITI Aayog, has estimated that the country would need average nominal growth of 9.25% a year to reach that goal, a pace India has never maintained over any 20-year stretch. That gap between aspiration and precedent underlines the scale of the challenge facing policymakers as the 2047 deadline draws nearer.
The comparison with China is telling. According to the Business Standard analysis, India outpaced China in per capita income growth in the first two decades after 1960, then fell far behind over the following 40 years. More recently, India has again moved ahead, even though it has not matched the growth rate Lahiri says would be needed to secure developed-country status. Measured in national currencies, the two countries were closer between 1980 and 2019 than dollar terms suggest, but the rupee’s heavier depreciation against the dollar than the yuan’s helped widen the gap in China’s favour.
The structural constraints are just as important as the headline growth figures. Higher investment is central to lifting per capita income, while a lower incremental capital-output ratio, or ICOR, means more output is generated from each unit of investment. Business Standard said India’s investment rate has typically lagged China’s, with the difference widening in the 2010s when China moved above 40% of GDP and India averaged about 30%. India’s ICOR, however, has been lower than China’s in the past decade, suggesting some improvement in efficiency even if the overall investment rate remains weaker.
The broader regional record offers some context, but not comfort. Major East Asian economies took between 19 and 26 years to move from lower-middle-income to high-income status, whereas India has remained in the lower-middle-income bracket since 2010. Separate analysis cited by Moneycontrol and Brookings has suggested India’s per capita income could continue converging with China’s over the next two decades, helped by structural reforms and stronger recent growth. Even so, the country’s path to 2047 will depend on whether it can combine faster expansion, higher investment and better productivity for long enough to change its long-term trajectory.
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