WES: India will not become a developed country by 2047

By 2047, marking a century of independence, India aims to be a developed nation. Sadly, I believe this to be aspirational rather than achievable.  

In a talk given at Warwick Economics Summit, named “India: The Quest for Strategic Resilience and strategic indispensability in a fragmented world”, Dr V. Anantha Nageswaran, India’s Chief Economic Advisor, explained how India is successfully developing and the challenges that come with this.  

2047 is a national milestone, but the target is not merely symbolic. It represents whether one billion people will see their nation revolutionise itself in a generation, achieving high-income status for its people.   

The primary economic objective of Viksit India, the aim to achieve developed country status by 2047, is largely defined by a $30-40 trillion GDP, $15,000-$18,000 GDP per capita and the bold ambition of eradicating poverty. 

India is in a pivotal moment, one of demographic urgency. The current Indian youth will be middle-aged by 2047: there is a small window for their productivity to be absorbed. Leveraging India’s demographic dividend provides an excellent opportunity for accelerated growth, but it also carries a risk: failure to do so will leave the country languishing in the middle-income trap. Avoiding this fate requires strong investment, stable institutions, competent governance and in my opinion, a human capital revolution.  

Nearly 75% of 10-11-year-olds cannot do basic division, according to testing

Currently, India’s economic performance is positive, with it experiencing “non-inflationary sustainable economic growth”. They anticipate a growth rate of 7.4% this year, experiencing low inflation of 1.9% for the first 9 months of the financial year. Food inflation has even seen deflation of 1.7%, helping people afford basic groceries.   

Furthermore, India has reduced its budget deficit from 9.2% in the fiscal year 2021 to 4.4% in the year ending this March. Due to this, they have received three credit rating upgrades from institutions like Morningstar who praised India’s structural reforms and fiscal consolidation.  

Whilst India is predicted by the IMF to remain one of the fastest-growing economies for the rest of the decade, I find it hard to believe that it will grow fast enough to reach developed-country status by 2047.   

According to Pratham, among standard 5 students (aged around 10-11), the number of students who could do division rose from 20.7% in 2014 to 26.5% in 2024. Reading abilities have also improved, with the proportion of those who can read a Grade 2-level text increasing from 42.8% in 2022 to 48.8% in 2024. However, this figure is still below the 50.5% rate seen in 2018, indicating a lack of tangible improvement.  

However, Nageswaran commented that “We completely understand if you think that these numbers are still on the lower side and much more needs to happen, but I can tell you the functional literacy and numeracy of Indians students are higher than what formal testing reveal”  

I believe this optimism risks downplaying the scale of the issue: functional ability and formal testing cannot be so different. Nearly 75% of 10-11-year-olds cannot do basic division, according to testing. However you look at it, there is a worrying lack of education. A lack of foundational skills will constrain workforce productivity, limiting industrial development and the expansion of the services sector.  

73% of the wealth created in 2017 went to the richest 1%; meanwhile, the poorest half of the population, totalling 670 million Indians, only saw a 1% increase in their wealth 

Given India’s large young population, you must consider if the demographic dividend will turn into a demographic burden. Nageswaran noted how “at least 8 million jobs or what I call livelihoods have to be created every year until 2035”. This is a significant opportunity for India to accelerate growth, but it is also a double-edged sword. Will India have enough investment, both domestic and foreign, to keep pace with labour-market entry if the workforce isn’t sufficiently skilled?  

The challenge is not only average educational performance, but also its distribution across the population. India has seen rapid growth, but this has coincided with a significant increase in inequality. 73% of the wealth created in 2017 went to the richest 1%; meanwhile, the poorest half of the population, totalling 670 million Indians, only saw a 1% increase in their wealth.   

Such inequality can be mitigated through significant investment in human capital. There are large gaps in educational access between urban and rural areas, with rural females having the lowest participation. If India plans to make use of its demographic dividend, it needs its workforce to be educated.  

This is especially the case because India’s per capita income growth needs to exceed China’s by 3.5 percentage points each year to meet the 2047 target. India has failed to match the educational achievements of East Asia, and without large-scale investment in education, it is hard to see how it can escape the middle-income trap.  

One reason for China’s great success is its emphasis on education. Between 2000 and 2020, the number of engineers in China increased from 5.2 million to 17.7 million, providing them with a sea of talent to develop technology. Being stuck in the middle-income trap is caused by the failure to compete with low-wage economies and by the high level of innovation in developed countries. China is moving away from reliance on cheap labour, instead striving to be at the forefront of technology. At its current rate, India will be unable to emulate China and escape the middle-income trap if its population isn’t educated enough to innovate.  

India’s economy is experiencing rapid, sustainable growth, and if this continues, it can achieve its goal by 2047. However, without bold investment in education and skills, they may squander their demographic dividend and fall into the trap many others have before them. I believe that India has the capability to become a developed nation, but its current economic goal is more of a nationalistic ambition than a realistic goal.