(MENAFN– Khaleej Times)
Powered by its demographic advantage, India has the potential to become the world’s second largest economy in terms of purchasing power parity by 2031 at a possible annual growth rate of 11 per cent, deputy governor of Reserve Bank of India said.
Currently, India is the world’s third largest in PPP terms, with a share of seven per cent of global GDP after China (18 per cent ) and the US (16 per cent), Michael Debabrata Patra explained.
“If India achieves a growth rate of 11 per cent into the next decade, it would become the second largest economy in the world not by 2048 as projected earlier, but by 2031,” Patra said while delivering a speech to celebrate ‘Azadi Ka Amrit Mohotsav’ organised by the Reserve Bank of India, Bhubaneswar.
Last week, Finance Minister Nirmala Sitharaman said India continues to be the fastest growing economy in the assessment of international agencies despite numerous challenges.
India’s GDP in market exchange rates is expected to reach $5 trillion by 2027 from the current $3.3 trillion. By that year, India’s GDP in PPP terms will exceed $16 trillion (up from $ 10 trillion in 2021), Patra noted. Despite the pandemic and the war in Europe, India was going to contribute about 14 per cent of global growth. In fact, India would be the second most important driver of global growth in 2022 after China, he said.
The Organisation of Economic Co-operation & Development’s 2021 calculations indicate that the Indian economy would overtake the US by 2048. This would make India the largest economy in the world after China in normal course, Patra pointed out.
He argued that the four engines that could power India to“achieve escape velocity from the emerging economy orbit and take off towards becoming an economic superpower” include demographics dividend, manufacturing, exports and internalisation.“If manufacturing were to grow at 10 per cent – the target set by the ‘Make in India’ campaign – its share would reach 25 per cent in 2030-31. India would become the manufacturing shop floor of the world,” he said.
With a population of 1.38 billion, India is the world’s youngest at 28.4 years. By 2023, India will be the most populous country in the world at 1.43 billion.
In terms of working-age population (WAP) ratio, India stands at an advantageous position vis-a-vis countries like China, Brazil, the US and Japan as the working-age populations of these countries have started declining already. While India’s WAP ratio will increase till 2045, even exceeding that of China by 2030, Patra said, adding that ‘making the most of this demographic dividend is India’s opportunity as well as a challenge.’
India must raise the share of manufacturing to at least 25 per cent of GDP to become a global manufacturing hub. To tap this potential, it is imperative to overturn conventional wisdom and catch up with other leading manufacturers of the world, Patra said.
In terms of exports ,from the current $800 billion worth of goods and services exports, which is about 2.7 per cent of the world total, if India can achieve the target of $1 trillion set by the government by 2030, it can boost India’s share to 5.0 per cent in world exports. With this, India would become an export powerhouse, the RBI deputy head said.
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