India ‘to remain lower middle economy by 2047’
Former Reserve Bank Governor Raghuram Rajan said India will still remain a lower-middle country if the potential growth rate remains at 6% annually without any rise in population by 2047 (Amrit Kaal) and will be reaching the end of the demographic dividend by then.
Speaking at a program organized by Manthan, the economist said if the country does not grow faster, it will grow older (demographically) before it gets more affluent, which means there is the burden of an aging population to deal with at that point.
Mr. Rajan said the GDP growth in India for the past two quarters was in the region of 7.5%, and if one looks at the labor force participation, it is very low, and when it comes to female participation, “it is the lowest in the G20.”
“India’s growth potential is about 6% a year, GDP growth today. If you do the math, at 6% a year, you double every 12 years, and therefore, in 24 years, we’ll be four times our per capita income.
“Today, the per capita income in India, as you know, is just a little below $2,500 per person. Multiply by four, we get $10,000 per person … So if you do the math, at our current rate of growth, you know, strong as it is highest in the G20, we don’t get rich but we stay lower middle income till 2047,” he said.