India’s journey towards becoming a $30 trillion economy by 2047 is an ambitious vision that reflects the nation’s aspirations for growth and prosperity. As the country celebrates 100 years of independence in 2047, the goal is to transform India into a global economic powerhouse. This path involves leveraging India’s strengths in sectors like technology, manufacturing, and services, while also addressing challenges such as infrastructure development, job creation, and sustainable growth. With the right strategies and policies, India aims to uplift millions out of poverty, enhance living standards, and secure its place among the world’s leading economies.
Tags: GS – 3, Economy- Industrial Growth– Infrastructure– Employment– Mobilisation of Resources
Context:
- India’s economic growth is often celebrated prematurely, despite its 7%-plus GDP growth rate and position as the fastest-growing large economy.
- To realise its goal of a $30-trillion economy by 2047, India must sustain rapid growth through liberal economic policies and leverage the private sector’s potential.
- As India approaches its centenary of independence in 2047, transitioning from a developing to a developed economy presents both a challenge and an opportunity.
What are the challenges in Achieving Developed Economy Status by 2047?
- Poverty and Inequality:
- Despite implementing socialist policies aimed at poverty alleviation, India’s poverty rate remained around 50% from Independence until 1991. Post-liberalization (1991-2011) saw a significant reduction, with poverty dropping to about 20% and lifting 350 million people out of poverty.
- Middle-Income Trap:
- The World Bank defines the middle-income trap as a situation where a country fails to transition from middle-income to high-income status due to rising costs and declining competitiveness.
- India risks falling into this trap, as only 23 of 101 middle-income economies in 1960 reached high-income status by 2018.
- There are concerns that India may struggle to advance beyond a per capita income of USD 5,000-6,000.
- Ageing Population:
- India’s population, currently approximately 1.4 billion, is projected to peak at 1.64 billion by 2048 before declining to 1.45 billion by 2100.
- This demographic shift will pose challenges related to increasing healthcare costs, growing pension obligations, and potential labour shortages.
- Stagnated Agriculture:
- Agriculture employs around 46% of India’s population but contributes only 16.5% to GDP.
- The sector’s stagnation is attributed to ineffective land reforms, unscientific practices, insufficient institutional credit, and climate variability.
- Lacking Manufacturing Sector:
- The manufacturing sector employs only 11.4% of India’s workforce, facing issues such as high input costs and fluctuating demand, according to the Economic Survey 2023-24.
- Poor Logistics:
- Logistics costs in India, ranging from 14-18% of GDP, exceed the global benchmark of 8%.
- India ranks 38th in the Logistics Performance Index (LPI) 2023, reflecting inefficiencies in the sector.
- Joblessness and Disguised Unemployment:
- Despite high growth years driven by the IT services boom (2000-10), 46% of the labour force remains in agriculture, contributing only 18% to GDP.
- Additionally, the unemployment rate surged to 9.2% in June 2024 from 7% in May 2024, according to CMIE.
- Labor Force Dynamics:
- Female labour force participation is at 37%, although improved from 26% in 2019.
- This rate remains low compared to other rapidly growing nations.
- Global Economic Slowdown:
- The global economic slowdown, along with volatile commodity prices, geopolitical tensions, and tightening financial conditions, hampers India’s economic development.
- These factors affect exports, increase import costs, and complicate recruitment and financing for development projects.
Key Measures Taken by the Government:
- Increase in CAPEX:
- In FY24, capital expenditure was increased by 28.2% year-on-year, with a focus on infrastructure development and encouraging private sector participation.
- Credit Growth:
- Scheduled Commercial Banks disbursed Rs 164.3 lakh crore in credit, reflecting a 20.2% growth. The Gross Non-Performing Assets (GNPA) ratio improved to 2.8%, reaching a 12-year low.
- Infrastructure Development:
- The construction pace of National Highways increased from 11.7 km per day in FY14 to 34 km per day by FY24. The Gati Shakti scheme (National Master Plan for multi-modal connectivity) aims to enhance coordination in infrastructure planning and execution to reduce logistics costs.
- National Monetisation Pipeline (NMP):
- The NMP projects a monetisation potential of Rs 6 lakh crore through the leasing of core assets in sectors such as roads, railways, power, oil and gas pipelines, telecom, and civil aviation over a four-year period (FY 2022-25).
- Digital India Initiative:
- The initiative focuses on national empowerment by improving living standards and promoting transparency through the development of digital infrastructure.
- National Education Policy and Skill India Mission:
- These initiatives aim to provide quality education and enhance skills across the population.
- Providing Direct Benefits:
- Programs like Direct Benefit Transfer (DBT) and Jan Dhan Yojana have improved fiscal efficiency and reduced leakages, thereby enhancing the expenditure capacity of individuals.
- Promoting Sustainability and Climate Resilience:
- India is pursuing sustainable economic development through Panchamrit targets and schemes such as the Solar Mission and National Wind-Solar Hybrid Policy.
Way Forward for India’s Economic Development:
- Developing Industrial Clusters:
- Enhance infrastructure by establishing industrial clusters with robust support systems.
- Implement a cluster-led model with relaxed regulations in designated areas to foster manufacturing.
- Avoid high tariffs that may hinder local manufacturers and reduce export competitiveness.
- Maintain Growth Momentum:
- Sustain the impressive GDP growth of 8.2% achieved in FY24, aiming to consistently surpass 8% in future quarters.
- Ensure that this strong growth trajectory continues to support the goal of achieving developed economy status.
- Addressing the Middle-Income Trap and Ensuring Growth:
- Develop a market-led economy that supports private enterprise with minimal government intervention.
- Focus on improving the ‘ease of doing business’ and advancing economic reforms.
- Adopt the ‘3i’ strategy (investment, infusion, innovation) as outlined in the World Bank’s World Development Report 2024 to navigate the middle-income trap, emulating successful models like South Korea.
- Expand Infrastructure:
- Invest in transport, urban development, and digital infrastructure, continuing the positive trends in National Highways construction and new airport terminals.
- Enhance rural and urban connectivity through initiatives such as the Pradhan Mantri Gram Sadak Yojana.
- Advancing Financial Sector and Monetary Stability:
- Improve banking sector health and financial intermediation, supported by the Insolvency and Bankruptcy Code.
- Focus on Skill Development and Employment:
- Invest in education and vocational training to bridge skill gaps, improve employment outcomes, and increase workforce participation.
- Increase female labour force participation, with potential economic benefits estimated by the IMF to boost GDP by 27% if aligned with male participation rates.
- Unleashing Demographic Dividend:
- Create low-skilled, employment-intensive manufacturing jobs to harness the potential of India’s working-age population, drawing inspiration from strategies used by ‘Asian Tigers’ like South Korea and Vietnam.
- Diversify and Expand:
- Support growth in key industries such as pharmaceuticals and electronics.
- Leverage India’s strengths in the services sector to expand its global market share.
- Foster Innovation:
- Encourage the development of start-ups and the gig economy to drive new business models and technological advancements.
- Green Transition:
- Accelerate investments in clean energy and sustainable practices.
- Expand renewable energy sources to meet projected increases in energy needs.
Conclusion
To achieve developed country status by 2047, India must pursue holistic development beyond mere economic growth. This requires addressing economic, social, environmental, and institutional factors. A comprehensive approach that integrates these dimensions will ensure balanced and sustainable progress, ultimately enhancing the overall well-being of its citizens.
UPSC Civil Services Examination, Previous Year Questions (PYQs)
Prelims:
Q:1 Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (2018)
- industrial output fails to keep pace with agricultural output.
- agricultural output fails to keep pace with industrial output.
- poverty and unemployment increase.
- imports grow faster than exports.
Ans: (c)
Mains:
Q:1 Justify the need for FDI for the development of the Indian economy. Why is there a gap between MoUs signed and actual FDIs? Suggest remedial steps to be taken for increasing actual FDIs in India. (2016)
Source: TH
FAQs
Q: What does it mean for India to aim for a $30 trillion economy by 2047?
- Answer: Aiming for a $30 trillion economy by 2047 means India is working towards becoming one of the world’s largest and most powerful economies by its 100th year of independence. This would involve significant growth in various sectors like manufacturing, services, technology, and infrastructure.
Q: How can India achieve a $30 trillion economy?
- Answer: To achieve this goal, India would need to invest in education, infrastructure, and innovation, improve its ease of doing business, and boost exports. Additionally, focusing on sectors like technology, green energy, and manufacturing will be crucial for driving economic growth.
Q: What role does India’s service sector play in reaching a $30 trillion economy?
- Answer: India’s service sector is a key driver of economic growth, contributing significantly to GDP and employment. Expanding this sector, particularly in IT, healthcare, and finance, will be vital for reaching the $30 trillion target, as it can attract foreign investment and create high-value jobs.
Q: What challenges does India face in its path to a $30 trillion economy?
- Answer: Challenges include tackling poverty, improving infrastructure, ensuring quality education, and addressing environmental concerns. Additionally, India will need to manage its demographic changes and provide opportunities for its growing population.
Q: How will a $30 trillion economy benefit the average Indian?
- Answer: If India reaches a $30 trillion economy, it could lead to better job opportunities, higher incomes, improved living standards, and more access to quality healthcare and education. This growth could also help reduce poverty and boost India’s global influence.
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