New Delhi: According to IMF Executive Director Krishnamurthy V Subramanian, India’s economy is expected to reach $55 trillion by 2047 if the nation achieves the challenging but attainable goal of registering an average real growth rate of 8% in the upcoming years.
Speaking at a media gathering here, he stated that 8% growth is doable given the nation’s demographics and the government policies implemented over the past ten years to increase the growth rate, such as innovation, entrepreneurship, and public digital infrastructure.
“If you take entrepreneurship, World Bank data shows that new firm creation surged from 2014 onwards. As a result, India has the third-largest entrepreneurial ecosystem in the world, which will help with the productivity growth in the formal sector,” he said.
Furthermore, he said that since between two-thirds and three-quarters of the Indian economy is informal and informal sector businesses are significantly less productive than formal sector ones, the country’s economy will become more formalised faster and result in higher productivity.
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“Formalisation is going to be a key driver for productivity growth in India, which is already happening through the (vast) public digital infrastructure,” he added.
The top IMF official responded to a question regarding the World Bank’s assertion that India will need 75 years to catch up to the US in terms of per capita income by stating that the term “middle income” is quite broad and that a country can fall into the middle-income trap even if its GDP per capita increases by two, three, or four times.
He also emphasised the need for manufacturing expansion for nations to break free from the middle-income trap and the need to include a sunset clause in any industry-specific subsidies.
Last month, the IMF increased its prediction for India’s GDP growth in 2024–25 from 6.8% to 7% due to “improving private consumption, particularly in rural India.”
“The forecast for growth in India has also been revised upward, to 7 per cent, this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas,” the IMF said in its World Economic Outlook report.
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–IANS
