India requires 7.6 percent annual growth for 25 years to attain developed nation status: RBI bulletin

India’s path to achieving developed nation status has been outlined in a recent research paper published in the Central Bank’s monthly bulletin. The report reveals that India must sustain an annual growth rate of 7.6 percent over the next 25 years to successfully transition into a developed economy. As per World Bank standards, a key criterion for classifying a country as a high-income nation is its per capita income. Presently, India’s per capita income stands at $2,500, necessitating a significant increase to surpass $21,664 by the year 2047.

As  per the study conducted by the Reserve Bank of India’s economic research department, the Indian economy would need to achieve a compound annual growth rate (CAGR) of 7.6 percent in real GDP from 2023–24 to 2047–48 to meet the requirements for becoming a developed nation. However, the study clarifies that this analysis does not represent the official view of the RBI.

The study further states that, in nominal terms, accounting for the impact of inflation, the economy would need to achieve a CAGR of 10.6 percent. The report provides insights into the growth trajectory India must sustain over the next couple of decades.

For the period between 2022 and 2023, India is projected to expand by 7.2 percent. Additionally, the RBI forecasts a GDP growth rate of 6.5 percent for the current fiscal year. These projections indicate the ongoing efforts to drive economic growth in the country.

To attain its long-term economic objectives, India needs to address the structure of its economy by boosting the industrial sector’s contribution to GDP. The goal is to increase the industrial sector’s proportion from the current 25.6 percent to 35 percent by the fiscal year 2047–48. Additionally, the article emphasizes that both agriculture and service activities must grow at a rate of 4.9 percent per year.

The article highlights that achieving high growth rates over an extended period is not uncommon in economic history. It underscores the importance of technological advancements and globalized markets in sustaining sustained high growth, emphasizing their relevance in India’s growth trajectory.

Furthermore to achieve the targeted nominal per capita GDP growth rate of 9.1 percent, India must surpass its previous records, as stated in the article. Additionally, the report highlights that sustained average annual real GDP growth of 7.6 percent over the next 25 years could pave the way for India to become a developed nation by 2047.

Various policy initiatives will drive India’s path to development, as emphasized in the analysis presented in the article. These initiatives include structural reforms, investments, the digitalization of the economy, logistics improvements, labor upskilling, and sector-specific policies focusing on manufacturing, exports, tourism, education, and health. These growth-enhancing measures are anticipated to contribute significantly to India’s transformation into a developed country