India’s $9.5 Trillion Economic Future: A Realistic Target, Says Arvind Panagariya

India’s goal of becoming a $9.5 trillion economy within the next decade and achieving high-income status by 2047 is well within reach, provided the country sustains a strong economic growth rate, according to Arvind Panagariya, Chairman of the 16th Finance Commission. Speaking at the 49th Civil Accounts Day celebrations in New Delhi on March 1, Panagariya highlighted that while structural reforms and macroeconomic stability are essential, India’s economic momentum remains strong.

India’s Economic Growth Path: A Decade of Opportunities

Emphasizing the country’s economic trajectory, Panagariya projected that India can reach a GDP of $9.5 trillion by 2034, provided it maintains an annual growth rate of 10.1% in dollar terms. This optimistic forecast is based on:

• India’s past performance, where the economy grew at an average of 10.1% per year from 2003 to 2024.
• Macroeconomic stability, which is crucial for sustaining this growth momentum.
• Democratic governance and policy continuity, which provide a foundation for long-term economic expansion.

Panagariya further outlined that to achieve high-income status by 2047, India must increase its per capita income to $14,000, requiring an annual per capita income growth rate of 7.3%. He emphasized that India’s current per capita income of $2,570 in 2023-24 leaves significant room for future growth.

“Per capita income of $14,000 is the threshold that India must cross to classify as a high-income country at 2023 dollar prices,” he stated.

Additionally, he noted that India’s population growth is expected to stabilize at 0.6% annually until 2047, creating an environment conducive to sustained economic growth.

India’s Long-Term Economic Performance and Currency Depreciation

Panagariya highlighted that India’s rapid economic growth phase began in 2003-04, with the country recording a 7.9% annual growth rate on average. Over the past 21 years, India has sustained a 7.8% growth rate in dollar terms at constant prices.

However, he acknowledged that the Indian rupee has depreciated by over 1% per year during this period, which has impacted the overall valuation of the economy in dollar terms. Despite this, he remains optimistic about India’s long-term economic trajectory.

GDP Growth Trends: A Closer Look at FY25

Commenting on recent GDP growth trends, Panagariya urged analysts to focus on long-term trends rather than short-term fluctuations. He pointed out:

• Growth in the first two quarters of FY25 was moderate compared to previous quarters.
• Q3 witnessed a strong rebound, demonstrating economic resilience.
• Temporary slowdowns should not divert focus from India’s long-term economic goals.

“Even if GDP figures are low in a quarter, speculation begins on whether Viksit Bharat is achievable. However, the broader trend remains positive,” he asserted.

Poverty Reduction: A Key Indicator of Economic Progress

Panagariya also emphasized the massive reduction in poverty over the last 21 years, attributing this progress to sustained economic growth and policy interventions. He noted:

• Regardless of measurement methodology, poverty has declined significantly.
• Economic expansion and job creation have been instrumental in lifting millions out of poverty.
• Continued growth and policy reforms will further improve living standards.

What Will Drive India’s Economic Growth in the Next Two Decades?

To ensure India reaches its $9.5 trillion economy goal and ultimately achieves high-income status by 2047, Panagariya outlined several key areas for focus:

1. Infrastructure Development: Investments in roads, railways, ports, and digital infrastructure will boost productivity and efficiency.
2. Structural Reforms: Continued reforms in taxation, labor laws, and trade policies will enhance competitiveness.
3. Manufacturing and Exports: Strengthening the Make in India initiative and expanding global trade partnerships will be crucial.
4. Skill Development and Human Capital: Investing in education, healthcare, and workforce training will drive long-term economic sustainability.
5. Innovation and Technology: Encouraging R&D and digital transformation will enable India to compete in the global knowledge economy.

India’s Economic Future is Bright

With robust economic fundamentals, a young workforce, and a commitment to reforms, India is well-positioned to achieve its ambitious economic targets. Panagariya’s projections reaffirm that, with policy continuity and sustained growth, India can cement its position as a global economic powerhouse by 2047.

The journey to Viksit Bharat (Developed India) is challenging, but with strategic investments and effective governance, the vision of a high-income, $9.5 trillion economy is well within reach.