India’s aspiration to become a developed nation by 2047 is not only ambitious but entirely achievable, said Arvind Panagariya, Chairman of the 16th Finance Commission, on Saturday. Speaking at the 49th Civil Accounts Day in New Delhi, Panagariya highlighted the necessity for India's per-capita income to reach USD 14,000 by 2047-48, requiring an annual growth rate of 7.3 per cent in dollar terms.
Currently, India's per-capita income stands around USD 2,570 (2023-24 figures), significantly lower compared to advanced economies such as South Korea, Taiwan, the United States, and several European nations.
Growth Targets and GDP Expectations
To attain the targeted per-capita income of USD 14,000, Panagariya explained that India's GDP must grow annually at approximately 7.9 per cent, considering a population growth projection of 0.6 per cent annually by 2050, as estimated by the United Nations."Our growth rate in real dollar terms for the last 21 years has been around 7.8 per cent," he noted, emphasising that shifting from a 7.8 per cent to a 7.9 per cent growth rate is entirely feasible. He stressed that leveraging existing technology, coupled with consistent capital accumulation and skill development, provides India with ample opportunities to bridge the per-capita income gap with developed nations.
Need for Labour-Intensive Industries and Job Creation
Highlighting the need for strategic economic reforms, Panagariya underscored that India's job creation initiatives must emphasise labour-intensive industries. While acknowledging strong employment opportunities in specialised sectors such as pharmaceuticals and machinery for highly skilled individuals, he expressed concerns about the scarcity of quality jobs available for the broader masses."There are good jobs certainly for the very highly skilled. We have the pharmaceutical industry, machinery industry, jobs for talented engineers. But when it comes to the masses, there is a jobs issue," Panagariya stated.
Caution on Capital Account Convertibility
Addressing the topic of capital account convertibility, Panagariya advocated a cautious approach. He remarked that India’s current method of managing the exchange rate has been effective and beneficial. Panagariya expressed his preference for gradualism regarding capital account convertibility, suggesting that the nation should wait until per-capita income reaches at least USD 8,000 to USD 10,000.“Since 1991, exchange rate management has generally been a positive contributor,” he pointed out. He cautioned that adopting full capital account convertibility could diminish India's ability to manage the exchange rate, removing a critical economic lever.
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