Many of the measures undertaken by the incumbent government over the last few years have all been aimed at making India amongst the top economies in the world by 2047 when the country celebrates a century of independence from the British empire.
Recent International Monetary Fund (IMF) projections show that India is likely to pip Germany and Japan to become the third biggest economy in the world, behind the USA and China, by 2027. But how long before India emerges as the top dog?
IMF in its prediction showed that the Japanese and German economies will grow to $5.2 trillion and $4.9 trillion each by 2027 while India is expected to grow to $5.4 trillion, at current prices.
By 2027, the Chinese & US economies are likely to grow to $26.44 trillion and $30.28 trillion each.
It may be noted that these projections are based on nominal growth rates in dollar terms.
Data shows that at the current rate of growth, overtaking Japan and Germany wouldn’t necessarily be a challenge for the Indian economy.
ET OnlineData and graphic source: TOI
What is the sweet spot?
India’s pre-Covid (2014-19) average annual nominal growth rate in dollar terms was around 6.8%. If India were to consistently grow at this particular rate, it will take approximately 400 years for India to become the world’s biggest economy. US & China grew by 4% and 6.4% during the same period.
Post-Covid, i.e., 2021-22, India grew at 9.2%. At this rate, it will take India nearly 650 years to be world’s top economy.
To become the world’s largest economy by 2047, India needs to grow at 14% every year, assuming its currency remains stable against the dollar.
While this isn’t particularly a cakewalk, it may be noted that during 2006-2011, India’s annual average growth rate was around 14% or even higher.
(With TOI inputs)
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