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India’s Ambition to Become a High-Income Nation by 2047
Context:
India’s aspiration to become a high-income, developed nation by 2047 is ambitious yet achievable, according to Auguste Tano Kouamé, the World Bank’s Country Director for India.
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- Speaking in an interview, Kouamé highlighted that while the journey ahead presents challenges, India’s historical growth trends and ongoing structural reforms indicate that the target is within reach.
A Long-Term Vision with Ups and Downs
- Fluctuations: Kouamé, who has been in his role since August 2022, acknowledged that India’s growth trajectory will have fluctuations, with some years witnessing slower growth and others exceeding expectations.
- However, he emphasised that the key to achieving the long-term goal is ensuring that periods of high growth offset the slower ones, maintaining a consistent upward economic trend.
- Achievable: “Yes, it is realistic and achievable,” Kouamé affirmed.
- “Over the past 25 years, India has maintained an average growth rate of 6.3%, despite experiencing significant economic shocks.
- In recent years, it has consistently been the fastest-growing large economy, which is a remarkable achievement.”
Need for Structural Reforms
- A recent World Bank report, Becoming a High-Income Economy in a Generation, echoed this sentiment, stating that while India’s goal is attainable, it requires an ambitious reform agenda.
- The report highlighted that India needs to sustain an average annual growth rate of 7.8% to meet its 2047 target.
- Without accelerated policy changes, a business-as-usual approach may not be sufficient to bridge the gap.
- Kouamé acknowledged that the global economic landscape is becoming more challenging, with slowing growth, inflationary pressures, and increasing economic fragmentation.
- However, he pointed out that India has demonstrated remarkable resilience, maintaining strong growth even when other major economies have struggled.
Strengthening Economic Fundamentals
To sustain high growth, Kouamé outlined several key economic priorities:
- Increasing the Investment-to-GDP Ratio: India must raise its investment-to-GDP ratio from 33.5% to 40% to fuel long-term economic expansion.
- Boosting Public and Private Sector Efficiency: Enhancing productivity in both sectors is crucial for sustained progress.
- Advancing Technology Integration: Greater adoption of digital and advanced technologies can drive economic transformation.
- Enhancing Labour Force Participation: Expanding job opportunities, particularly in high-employment sectors like manufacturing, tourism, and green industries, is essential.
- Additionally, skill development programs and greater workforce participation, especially among women, are needed.
Regulatory and Structural Reforms
Kouamé emphasized that achieving sustained growth will require continued regulatory and structural reforms to create a more business-friendly environment. These include:
- Improving Labour Market Flexibility: More adaptable labor laws can encourage higher employment and productivity.
- Easing Business Regulations: Reducing bureaucratic red tape and streamlining processes can enhance investor confidence.
- Facilitating Access to Land and Finance: Making it easier for businesses, particularly in manufacturing, to obtain land and credit is crucial for expansion.
Learning from Successful Models
- Kouamé cited states such as Tamil Nadu, Gujarat, and Maharashtra as examples of successful investment-friendly policies.
- He highlighted Gujarat’s rapid business licensing process, where some firms have received approvals within a single day.
- Scaling such efficient regulatory frameworks across India, he argued, would significantly boost private sector participation and economic growth.
