It’s time for a broad transition from quantity to quality

livemint.com:

India’s 18th Lok Sabha elections will be held in the first quarter of fiscal year 2024-25. One of the major campaign planks that the ruling Bharatiya Janata Party (BJP) has adopted is the aspiration of a “viksit" or developed India by 2047. A developed country is widely understood as one that is industrialized, has a high Gross National Income (GNI) per capita, scores well on human development indicators and has institutions of quality.

The commonly used World Bank metric uses a GNI per capita of $13,845 (December 2022) to separate upper-middle-income and developed countries, and $4,465 to classify upper and lower middle-income countries apart. By this definition, India is classified as a lower middle-income country with a GNI per capita of $2,390. While the arithmetic is a bit more complicated because of relative growth rates and exchange rate differentials, a simple extrapolation requires India’s GNI per capita to grow at a compound annual growth rate (CAGR) of 7.4% over the next quarter century.

India’s peak growth rate for GNP per capita has been around 7% in the past 30 years and its annual average during that time has been between 5% and 6%. Beyond the quantitative stretch that is required, India must begin a qualitative transformation as well. The growth rate that an economy may be expected to have, the so-called trend growth rate, is a function of increased labour and capital as well as the productivity of these basic inputs.