Vincent Fernandes

AsIndia aims for developed-country status by 2047, its path forwards demands overcoming economic challenges in labour, education, trade and regulation. India can achieve lasting economic and social transformation by 2047, but it requires sustained annual GDP growth of 7% to 10%, massive job creation, and major structural reforms.

Earlier this year, Prime Minister Narendra Modi announced that India aims to achieve developed-country status by 2047, the centenary of its independence from the British Empire. This ambitious goal, which could transform the Indian economy and reshape the global economic landscape, has generated widespread excitement.

But reaching this milestone is no small feat. Conservative estimates suggest that India’s per capita income growth would need to outpace China’s by 3.5 percent-age points each year to meet Modi’s 2047 target. While India has experienced strong annual growth of six to eight percent in recent years, the economy is al-ready showing signs of slowing. Moreover, even if a slowdown can be averted, sustaining this growth momentum over the next two decades will be challenging.

India is a country of extremes. It has a thriving software industry, and its bio-metric identification system, Aadhaar, has enabled the government to co-ordinate public services for the world’s largest population. And India is home to world-class universities, particularly the Institutes of Technology and Institutes of Man-agement.

But India’s shift from rural to urban employment has lagged behind most devel-oping countries, exacerbating inequality. While the country has 167 billionaires, more than 129 million people still live below the poverty line. These disparities extend to the education system, where over half of the country’s fifth-grade stu-dents struggle to read at a second-grade level.

But although the country’s GDP growth accelerated, it never matched the rapid pace of China’s economic rise. In its latest World Economic Outlook, the Interna-tional Monetary Fund estimated India’s per capita income at $2,730, compared to China’s $13,140.

Despite China’s current economic challenges, most analysts expect it to achieve developed-country status by the 2040s. For India to do the same, it must address several glaring economic weaknesses. But given that the pace of reforms has slowed over the past decade, it is unclear whether it can muster the political will to pursue the changes needed to meet the 2047 target.

Four areas require urgent attention: labour, education, trade and regulation. In-dia’s restrictive labour laws, which make it extremely difficult to fire workers, present a particularly serious policy challenge.

“Lessons from countries like Chile, Korea and Poland show how they have suc-cessfully made the transition from middle- to high-income countries by deepen-ing their integration into the global economy,” said Auguste Tano Kouamé, World Bank Country Director. “India can chart its own path by stepping up the pace of reforms and building on its past achievements.”

More private and public investment (increasing the real investment rate from around 33.5 percent of GDP to 40 percent by 2035) will be fundamental to long-term growth. The report notes actions such as strengthening financial sector regu-lations, removing constraints to formal credit for micro, small, and medium en-terprises (MSMEs), and simplifying foreign direct investment (FDI) policies will be critical.

The report recommends incentivizing the private sector to invest in job-rich sec-tors like agro-processing manufacturing, hospitality, transportation, and care economy. This requires targeted strategies for labor-intensive sectors, a bigger skilled workforce, greater access to finance and fostering an innovation-driven economy.

One major driver of India’s earlier economic reforms was the loosening of tight controls on foreign trade and capital flows. But under Modi’s ‘made in India’ policies, the country has reverted toward protectionism, imposing tariffs and erecting other import barriers while subsidizing the domestic production of essen-tial goods. This protectionist turn casts a shadow over India’s growth prospects. Without a rapid expansion of labour-intensive industries and exports, it is doubt-ful that the country can maintain the growth rate needed to achieve developed-country status by 2047.

Currently the share of agriculture in employment is 45 percent. Allocation of land, labor and capital to more productive sectors, like manufacturing and ser-vices, can help raise firm and labor productivity. Strengthening infrastructure, adopting modern technology, streamlining labor market regulations and lowering the compliance burden on firms will further drive productivity and competitive-ness.

The state of the global economy in 2050 will partly depend on how quickly and effectively India implements these changes. Given the right policies, the country could reach high-income status by 2047. Otherwise, it risks remaining a middle-income country plagued by low productivity and sluggish growth. From the dawn of Independence in 1947 to the vision of a developed India in 2047, every generation has contributed to India’s remarkable story.