India needs to grow at 7.6% a year for 25 years to be a developed nation: RBI bulletin

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The Reserve Bank Monday, in its monthly bulletin, said India's real GDP will needs to grow at 7.6% annually over the next 25 years to achieve the per capita income level to become a developed economy India's per capita income is currently estimated at $2,500, while it must be more than $21,664 by 2047, as per World Bank standards, to be classified as a high-income country. It must be noted that as per World Bank classification, a country with a per capita income of US$ 13,205 or more in 2022-23 is classified as a high-income country.

The report further said "To achieve this target, the required real GDP compounded annual growth rate (CAGR) for India works out to be 7.6% during 2023-24 to 2047-48." The report said to become an high-income country by 2047-48, India’s per capita GDP in nominal terms would have to record a CAGR of 10.6% (9.1%). It may, however, be mentioned that the best India achieved over a period of consecutive 25 years in the past is a CAGR of 8.1% during 1993-94 to 2017-18.

It may be stated that India must surpass its preceding record to achieve the nominal per capita GDP of 9.1% growth target. To sustain growth over the next 25 years, India must rebalance its economic structure by strengthening its industrial sector which has strong backward and forward linkages.

Besides providing employment opportunities, a wider industrial sector would mean that India would be able to meet domestically the increasing demand from the burgeoning population. Accordingly, it is expected that India’s industrial sector should increase its share from the current 25.6% to 35% by 2047-48 with manufacturing occupying a 25% share in total value added.