The golden era of Indian economy

The Border Security Force Camel Band parades on Republic Day at Rajpath, New Delhi, India, Jan. 26, 2015. (Wikimedia Commons)
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Updated 25 January 2023
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The golden era of Indian economy

  • The India of 2023 is very different from the India of 1947, and the India of 2047 will be different from the India of 2023
  • There is certainly much that is uncertain in the world, but there is also much of which we can be certain; within that band of certainty, it is impossible to dispute India’s inexorable economic rise

India recently celebrated 75 years of independence. The idea of “Amrit Kaal” builds on this with a road map for the next 25 years, taking us to 2047 when India will celebrate 100 years of independence.

The India of 2023 is, of course, very different from the India of 1947, and the India of 2047 in turn will be different from the India of 2023 in ways few can anticipate and project; if one casts one’s mind back, how many would have guessed the changes wrought in India over the past 25 years?

The world is an uncertain place, and in the long term even more so. While the future is always uncertain, the current state of the world has been permeated with an additional dose of uncertainty as a result of factors such as the COVID-19 pandemic, geopolitical tensions, the collapse of the multilateral system and regionalism, the retreat of advanced countries from globalization, and the dreaded warnings of “recession” in some of those countries.

These are external shocks that have been thrust on India, as they have on many emerging market economies, and underline the collapse of institutions that provide global public good, the Bretton Woods institutions included.

Global governance has yet to accept the rise of economies such as India. Lord Keynes is often quoted, usually out of context, as sharing the cliche: “In the long run we are all dead.” If one reads the complete text (“The Tract on Monetary Reform,” 1923), one will find his intention was not quite what this out-of-context quote might convey.

There is certainly much that is uncertain in the world, at present and for the long term. But there is also much of which we can be certain. Within that band of certainty, it is impossible to dispute India’s inexorable economic rise.

Much was made of the Goldman Sachs report “Dreaming with BRICS: The path to 2050,” when it was published in 2003. BRICS refers to the leading emerging economies of Brazil, Russia, India, China and South Africa.

It predicted an average real rate of gross domestic product growth in India of about 5.5 percent, with the rise in aggregate GDP and per capita GDP by 2050 explained by the nature of the exponential function.

The report did not include a projected figure for 2047 specifically but did give one for 2045: It predicted that India’s aggregate GDP would be $18.8 trillion, with per capita GDP of just over $12,000.

None of the reasons behind these optimistic projections have been nullified by the current global uncertainty — increase in savings/investment rates as a result of demographic transition and income growth, growth drivers in more efficient land, labor and capital markets and productivity enhancement.

To use an economist’s expression, India is still within the production possibility frontier, not on it. To put it another way, aggregate growth for India is a summation of growth in states, and states are within their respective frontiers, providing plenty of endogenous slack for growth.

Had events in the external world been more benign, India might have grown at 9 percent. Typically, one tends to extrapolate the gloominess of the present into the future. It is by no means obvious that global conditions will continue to be difficult for the next 25 years. But even if that were to be the case, India still might not grow at 9 percent. What growth rate seems reasonable, therefore?

The answer depends on the person making the projection and the assumptions that are made. A nominal figure depends on assumptions about inflation, which is why projections are often presented in real terms, in today’s dollars. A dollar figure also depends on assumptions about the dollar/rupee exchange rate, which is why projections are often based on the current exchange rate (the Goldman Sachs report assumed appreciation of the rupee vis-a-vis the dollar.) A prediction based on purchasing power parity is, naturally, different.

With inflation and exchange rate fluctuations out of the way, then, what trajectory of real growth in India sounds reasonable? The pessimistic forecaster will point to domestic inefficiencies and the state of the wider world and opt for 5.5 percent. The optimistic forecaster will point to empowerment through easier living and the provision of basic necessities, greater ease of doing business, supply-side reforms, and the government’s capital expenditure and opt for 7.5 percent.

That is the rough range of growth to consider, with recognition that as an economy grows, growth rates slow. As one moves up the development ladder, it becomes more difficult to grow as quickly, with the caveat that different states are at different levels of development and so there is plenty of slack.

To return to long-term uncertainty, one can plug in one’s own assumptions about real growth, say something like 6.5 percent, midway between the extremes of 5.5 percent and 7.5 percent. Based on that, India’s per capita income in 2047 would be something like $10,000 and the total size of the economy will approach $20 trillion.

These figures are broadly in the same range as the Goldman Sachs predictions, in which the role of exchange rate appreciation was relatively greater. In such projections, the role of real growth is relatively more.

If reforms succeed in driving economic growth higher than 6.5 percent — and such a “citius, altius, fortius” (faster, higher, stronger) possibility cannot be ruled out — the corresponding numbers will be higher.

Even with the relatively conservative figures, however, India would be the third-largest economy in the world, after the US and China, and this will naturally be reflected in India’s global clout. In a purchasing power parity ranking, India would be second-largest after China.

India’s annual rate of population growth has slowed and is now less than 1 percent. Nevertheless, in 2047, it will be the most populous country in the world, with a population of about 1.6 billion.

Expressions such as “developed country” are rarely used these days and the term no longer has a specific definition. The World Bank instead uses terms such as “middle-income.” India is currently classified as a lower-middle-income economy. By 2047, it will have moved to upper-middle-income classification.

When a country approaches a per capita income of $13,000, its status shifts to high-income. That will be when India can be said to be “developed.” In 2047, India will still fall short of this but the face of poverty in the country, as we know it, will have been completely transformed.

The measurement of poverty is based on the notion of a “poverty line” and, by using a multi-dimensional poverty index, the UN Development Program recently documented a sharp drop in the number of people in India categorized as “poor.”

As economies develop, the position of a poverty line of course shifts upward, beyond merely a subsistence level of consumption. Officially, however, the poverty line that continues to be used in India is still the Tendulkar poverty line. Unfortunately, consumption expenditure data, which is used to measure poverty, does not exist beyond 2011/12. Therefore different analysts now use different assumptions to measure poverty.

If, for example, one uses periodic labor force survey data and the Tendulkar poverty line, the poverty ratio (the percentage of the population below the poverty line) is currently about 17 percent. By 2047, it is forecast that this will have fallen to about 5 percent.

Sustainable Development Goal reports, among other analyses, have documented pockets of deprivation in specific geographical regions, which have been targeted by the government through its Aspirational Districts Program. India is a heterogeneous society and so despite the provision of basic necessities — such as physical and social infrastructure, financial inclusion, access to markets, technology and digital access — and an overall message of empowerment, there will continue to be pockets of poverty in the country, even in 2047.

But the nature of that poverty will be very different compared with today. India will have achieved universal literacy, or be pretty close to it. UNDP uses the Human Development Index, an aggregate measure, to gauge the development of people beyond poverty ratios. Currently, India is in the medium category of human development, based on HDI. By 2047, it will rank in the high category of human development.

There are five transitions underway and these will be even more pronounced by 2047. Firstly, there is a rural-to-urban shift, and urbanization correlates with development. By 2047, almost 60 percent of India’s population will be urbanized. It is predicted that Delhi and Kolkata will have populations of about 35 million, and Mumbai more than 40 million. The mind boggles at such figures and government programs are being developed with the aim of ensuring urbanization is better managed.

Secondly, there will be greater formalization of the economy. Such formalization is another factor that correlates with growth and development. Employees will have formal job contracts. Micro, small and medium enterprises will be legally registered. Indian companies will become larger, more efficient, and fully integrated into global supply chains.

Thirdly, the percentage of the population that earns a living from agriculture will decline. Agriculture’s share in gross domestic product will decline to something like 5 percent, and the percentage of the population earning a living from agriculture will not be more than 20 percent. Fourthly, there will be a shift in agriculture toward commercialization, diversification and larger farms.

Fifthly, there will be greater participation of citizens in governance, in keeping with the theme of “sabka prayas” (everyone’s effort). For years, there was a colonial chip on the nation’s shoulder. But present-day India is a proud India, a resilient India, an aspiring India. Amrit Kaal reflects that, and the country is making great strides on economic fronts, with greater confidence and entrepreneurship.

  • Bibek Debroy is the chairman of the Economic Advisory Council to the Prime Minister in the Government of India.

EU warns Armenia about Russian ‘hybrid threats’

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EU warns Armenia about Russian ‘hybrid threats’

YEREVAN: The EU’s top diplomat Kaja Kallas urged Armenia to protect its democratic values amid “hybrid threats” from Russia on a visit to Yerevan on Monday.
Ties between Armenia and its traditional ally Russia have been strained since Azerbaijan’s 2023 offensive on Nagorno-Karabakh, in which Moscow did not intervene.
Russia has for years been the main mediator between Armenia and Azerbaijan. But Brussels has played a stronger role recently, with Russia tied up with its Ukraine invasion.
Kallas visited several days after Armenia arrested a powerful cleric accused of plotting a coup against Prime Minister Nikol Pashinyan.
She said she discussed “Russia’s aggression against Ukraine and specifically Russian hybrid activities in all countries” with Armenia’s foreign minister Ararat Mirzoyan.
“Armenia’s commitment to democracy and freedom is key. These values must be protected, especially in the face of hybrid threats, disinformation, and foreign interference,” she said.
Mirzoyan warned Moscow against interfering in its internal political affairs after the arrest of powerful cleric Bagrat Galstanyan.
But speaking in Kyrgyzstan, Russian Foreign Minister Sergei Lavrov warned Armenia against turning away from Moscow and against “attacks on the canonical, millennia-old Armenian Apostolic Church.”
“We do not put any pressure on Armenian authorities, we will wait for clarity on all these issues,” Lavrov said according to Russian news agencies.
“But we all understand that if Armenia turns away from its allies, its closest partners and neighbors, it will hardly be in the interests of the Armenian people,” he added.
Mirzoyan said Lavrov “would do better not to interfere in Armenia’s internal affairs and domestic politics,” calling on Russian officials to “show greater respect for the sovereignty of the Republic of Armenia.”
Kallas said “the EU and Armenia have never been as close as we are now.”
She announced a new EU-Armenia partnership and a 270-million-euro “resilience and growth plan for 2024-2027.” She also welcomed Armenia’s move to initiate an EU accession process earlier this year.
Kallas re-affirmed the EU’s support to normalizing relations between Armenia and Azerbaijan.

Cyprus invites Turkiye’s Erdogan to summit despite long rift over 1974 invasion

Updated 13 min 12 sec ago
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Cyprus invites Turkiye’s Erdogan to summit despite long rift over 1974 invasion

NICOSIA: Cyprus said on Monday it would invite arch-foe Turkiye to a summit during its European Union presidency next year despite a decades-long rift over Ankara’s 1974 invasion and its backing of a breakaway state on the divided island.
Nicosia will hold the rotating EU presidency in the first six months of 2026 and plans a summit of regional leaders, including Turkish President Tayyip Erdogan, on issues related to the Middle East, Cypriot President Nikos Christodoulides said.
“You can’t change geography — Turkiye will always be a neighbor state to the Republic of Cyprus .. Mr.Erdogan will of course be welcome to this summit to discuss developments in the area,” he told journalists in Nicosia.
Christodoulides had earlier said the same in a British podcast aired on Monday in response to a question, saying the summit was planned for April 2026.
The Turkish presidency did not immediately respond to a Reuters request for comment on the invitation to Erdogan.
Cyprus and Turkiye have no diplomatic relations and hosting a Turkish president might prove challenging both because of the diplomatic tightrope arising from past conflict and logistical issues.
The eastern Mediterranean island was partitioned by a Turkish invasion in 1974 sparked by a brief Greek-inspired coup, and Ankara supports a breakaway, unrecognized state in north Cyprus where it stations thousands of troops.
Christodoulides heads a Greek Cypriot administration that represents all of Cyprus within the EU but with its powers stopping at a ceasefire line splitting the island into northern and southern sections. Erdogan has never visited the south.


A hard right lawmaker is sworn in as Greece’s migration minister

Updated 42 min 51 sec ago
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A hard right lawmaker is sworn in as Greece’s migration minister

  • Thanos Plevris, 48, is expected to maintain Greece’s hard line in migration policy

ATHENS: A hard-right lawmaker was sworn in Monday as Greece’s migration minister, replacing a fellow right-wing political heavyweight who resigned following accusations of involvement in the distribution of European Union farm subsidies.
Five high-ranking government officials, including the previous migration minister, Makis Voridis, three deputy ministers and a secretary general, resigned last Friday following allegations they were involved in a scheme to provide EU agriculture subsidies to undeserving recipients.
The funds, which were handled by a government body known by its Greek acronym OPEKEPE, were allegedly given to numerous people who had made false declarations of owning or leasing non-existent pastures or livestock.
Thanos Plevris, 48, succeeded Voridis and is expected to maintain Greece’s hard line in migration policy. Both Plevris and Voridis joined the conservative New Democracy party in 2012, from the right-wing populist Popular Orthodox Rally, or LAOS, party.
Voridis has denied any involvement in the alleged farm subsidy fraud and said he resigned in order to clear his name.
The European Public Prosecutor’s Office, which has investigated the case, passed on a hefty file to the Greek Parliament last week that includes allegations of possible involvement of government ministers. Lawmakers enjoy immunity from prosecution in Greece that can only be lifted by parliamentary vote.
On Sunday, Prime Minister Kyriakos Mitsotakis said his New Democracy party had failed to stamp out graft.
“Significant reform efforts were made,” Mitsotakis said in a social media post. “But let’s be honest. We failed.”
He said anyone found to have received EU funds they were not entitled to would be ordered to return the money.
“Our many farmers and livestock breeders who toil and produce quality products, and all law-abiding citizens, will not tolerate scammers who claimed to have non-existent pastures and livestock, or those who enabled them to do so,” Mitsotakis said.


Scorching temperatures grip Europe, putting regions on high alert

Updated 55 min 26 sec ago
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Scorching temperatures grip Europe, putting regions on high alert

ANKARA: Forest fires fanned by high winds and hot, dry weather damaged some holiday homes in Turkiye as a lingering heat wave that has cooked much of Europe led authorities to raise warnings and tourists to find ways to beat the heat on Monday.
A heat dome hovered over an arc from France, Portugal and Spain to Turkiye, while data from European forecasters suggested other countries were set to broil further in coming days. New highs are expected on Wednesday before rain is forecast to bring respite to some areas later this week.
“Extreme heat is no longer a rare event — it has become the new normal,” tweeted UN Secretary-General António Guterres from Seville, Spain, where temperatures were expected to hit 42 Celsius (nearly 108 Fahrenheit) on Monday afternoon.
Reiterating his frequent calls for action to fight climate change, Guterres added: “The planet is getting hotter & more dangerous — no country is immune.”
In France, which was almost entirely sweltering in the heatwave on Monday and where air conditioning remains relatively rare, local and national authorities were taking extra effort to care for homeless and elderly people and people working outside.
Some tourists were putting off plans for some rigorous outdoor activities.
“We were going to do a bike tour today actually, but we decided because it was gonna be so warm not to do the bike tour,” said Andrea Tyson, 46, who was visiting Paris from New Philadelphia, Ohio.
Authorities in Portugal issued a red heat warning for seven of 18 districts as temperatures were forecast to hit 43 degrees Celsius, a day after logging a record June temperature of 46.6 degrees C. Almost all inland areas were at high risk of wildfires.
In Turkiye, forest fires fanned by strong winds damaged some holiday homes in Izmir’s Doganbey region and forced the temporary closure of the airport in Izmir, the state-run Anadolu Agency reported. Authorities evacuated four villages as a precaution, the Forestry Ministry said.
In Italy, the Health Ministry put 21 cities under its level three “red” alert, which indicates “emergency conditions with possible negative effects” on healthy, active people as well as at-risk old people, children and chronically ill people.
Regional governments in northwestern Liguria and southern Sicily in Italy put restrictions on outdoor work, such as construction and agricultural labor, during the peak heat hours.
In southern Germany, temperatures of up to 35 degrees Celsius (95 Fahrenheit) were expected on Monday, and they were forecast to creep higher until midweek – going as high as 39 degrees (102F) on Wednesday.
Some German towns and regions imposed limits on how much water can be taken from rivers and lakes.


North Korea’s Kim seen draping coffins with flag at Russia treaty anniversary

Updated 30 June 2025
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North Korea’s Kim seen draping coffins with flag at Russia treaty anniversary

SEOUL: North Korea’s state media showed on Monday leader Kim Jong Un draping coffins with the national flag in what appeared to be the repatriation of soldiers killed fighting for Russia against Ukraine, as the countries marked a landmark military treaty.
In a series of photographs displayed in the backdrop of a gala performance by North Korean and visiting Russian artists in Pyongyang, Kim is seen by rows of a half a dozen coffins, covering them with flags and pausing briefly with both hands resting on them.
The scene followed images of North Korean and Russian soldiers waving their national flags with patriotic notes written in Korean. Kim is seen at the gala seemingly overcome with emotion and audience members wiping away tears.
North Korea’s state KRT television aired the performance, which was attended by Russian Culture Minister Olga Lyubimova who is leading a delegation to mark the first anniversary of the strategic partnership treaty as Kim’s guest.
The performance was enthusiastically received for inspiring confidence in the “ties of friendship and the genuine internationalist obligation between the peoples and armies of the two countries that were forged at the cost of blood,” KCNA news agency said.
Kim and Russian President Vladimir Putin signed the strategic partnership treaty in June last year in Pyongyang. It includes a mutual defense pact.
After months of silence, the two countries have disclosed the deployment of North Korean troops and lauded the “heroic” role they played in Moscow’s offensive against Ukraine to reclaim the Kursk region in western Russia.