Could India soon be the second largest economy in the world? RBI Deputy Governor Michael Patra says it is “conceivable that in the next decade India will become the world’s second largest economy, not in 2048, but as early as 2031, and the world’s largest economy by 2060.”
In a speech titled “Preparing India's monetary policy for the future” at the Lal Bahadur Shastri National Academy of Administration in Mussoorie, Patra pointed out that the Organisation for Economic Co-operation and Development (OECD) already projects that India will overtake the US to become the world's second-largest economy in purchasing power parity terms by 2048. However, he thinks it is possible that this could happen sooner – in the next seven years.
Patra emphasised India's inherent strengths and its determination to achieve its ambitious goals. He noted that the 'Age of China' began in the early 1990s and the country rose to become the world's second largest economy. However, he stressed that India's time had come from 2010 onwards and several factors were coming together to enable India to emerge as one of the world's leading countries in the next two to three decades.
Patra believes that India's growth is driven by several key factors.
In a speech titled “Preparing India's monetary policy for the future” at the Lal Bahadur Shastri National Academy of Administration in Mussoorie, Patra pointed out that the Organisation for Economic Co-operation and Development (OECD) already projects that India will overtake the US to become the world's second-largest economy in purchasing power parity terms by 2048. However, he thinks it is possible that this could happen sooner – in the next seven years.
Patra emphasised India's inherent strengths and its determination to achieve its ambitious goals. He noted that the 'Age of China' began in the early 1990s and the country rose to become the world's second largest economy. However, he stressed that India's time had come from 2010 onwards and several factors were coming together to enable India to emerge as one of the world's leading countries in the next two to three decades.
Patra believes that India's growth is driven by several key factors.
- First, investment, traditionally supported by domestic savings, is stabilising and showing signs of accelerating. In addition, the current account deficit and external debt are manageable.
- Second, effective monetary policy and inflation control have led to macroeconomic and financial stability, underpinning the growth outlook. The improving health of the banking sector and ongoing fiscal consolidation further contribute to stability.
- Third, India’s favourable demographic development with its young and growing workforce promises sustainable growth.
- Another growth multiplier is India's digital revolution. India is emerging as a global leader in leveraging digital technologies for transformative change.
He said that if India can achieve a growth rate of 9.6% per annum over the next decade, he believes the country will break out of the lower middle income trap and emerge as a developed economy. “These gains need to be reflected in per capita income, with two milestones to be achieved: a per capita income level of $4,516-$14,005 to achieve middle income country status, and a higher level to achieve the position of a developed country today,” he said.
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