Onwards to Viksit Bharat

Initiating policy reforms on the priorities outlined in the Budget without delay is crucial for India's developmental goal

After the noise and euphoria following the Union Budget presentation, it is now time to take a filtered look at the medium and longterm strategies and policy interventions needed to make India a developed country. According to the World Bank's definition, a developed country in fiscal 2025 has a per capita gross national income (GNI) of $14,005. India's GNI is estimated at $2,600, implying that to leapfrog into the developed country club, India must multiply its per capita GNI by 5.3 times. This translates into an average annual growth of about 7.5 per cent in per capita GNI or about 9 per cent per year in overall GNI for the next 23 years.

Moreover, India's population is likely to stabilise only in 2045, and the Economic Survey estimates that about 8 million new jobs will have to be created in the non-farm sector every year until 2030. In addition to accelerating growth and creating employment avenues, India is a signatory to the Paris Agreement to make a transition to Net Zero by 2070, involving massive investments to phase out fossil fuels.

Accelerating growth requires the economy to enhance both investments and productivity. At the present incremental capital-output ratio of 5, the investment rate must increase to 40 per cent of gross domestic product (GDP) from the prevailing 34 per cent. Any shortfall will have to be compensated by increasing productivity. Therefore, the application of new technologies and imparting greater education and skills to the workforce are equally important. These are difficult challenges that require redefining priorities and initiating policy reforms without delay.