Achievable dream

Investments, productivity, labour force and per capita GDP growth indicate that Viksit Bharat is in India’s future

- SURJIT S. BHALLA

ON AUGUST 15, 2022, Prime Minister Narendra Modi took a long-term view of the Indian economy by outlining an ambitious vision—India to be a developed economy by 2047. The last time an Indian prime minister had outlined a long-term vision was in 1956 when the ambitious, unrealistic, insular and disastrous second Five-Year Plan was unveiled for India’s futuristic development (a state directed investment plan later christened as the Nehru-Mahalanobis licence raj model).

This Five-Year Plan was to bring in more curtailment of economic freedom, a ‘plan’ which ended with the extinguishing of both economic and political freedom with the announcement of the Emergency in 1975. Six years earlier, in 1969, Bank nationalisation was introduced; and by 1991, India was in a severe debt crisis, pledging gold to the IMF. The year also marked the beginning of a strong reversal of the past—economic reforms and economic growth, and the dismantling of the licence raj model was to be the new future of the Indian economy.

That new and productive future is the essence of Modi’s vision of Viksit Bharat. It has its deficiencies as it is currently implemented—it is hoped that the ambition will correct the current economic policy mistakes. The determinants of growth suggest that the 2047 goals are realistic.

At the time the vision was outlined, the BJP had just recorded its second straight big victory in the elections in Uttar Pradesh, India’s largest state. The Indian economy had also recovered strongly from the Covid shock. Although there was great uncertainty about India’s expected growth rate over the next 25 years at that time, that uncertainty is less today. For the third year running, India has recorded the fastest GDP growth rate among the world economies (upwards of 7.5 per cent a year) and the IMF estimates India will retain the top spot at least until 2029.