Key points
- Per capita income must rise more than sixfold
- Investment and structural reforms remain key challenges
- Recent growth remains below the required long-term pace
ISLAMABAD: India’s ambition to become a developed economy by 2047 is facing a widening growth challenge, with economists saying the country needs to sustain a substantially faster expansion than its current pace for more than two decades.
India’s economy is expected to have grown about 7.1 per cent year-on-year in the April-June quarter of 2026, according to a Reuters poll, down from 7.8 per cent in the previous quarter.
Economists also expect growth to moderate further in coming quarters.
The latest assessment comes as Prime Minister Narendra Modi continues to make the “Viksit Bharat” — or developed India — goal a central element of his economic agenda.
Modi has set 2047, the centenary of India’s independence, as the deadline for achieving developed-country status. He reiterated the ambition in his Independence Day address this month.
The scale of the challenge was highlighted by NITI Aayog Vice-Chairman Ashok Lahiri, who said India would need average annual nominal growth of 9.25 per cent for 21 years to lift per capita income from an estimated $2,813 in 2026 to about $18,000 by 2047.
That represents a more than sixfold increase in per capita income and would require an exceptionally strong and sustained expansion.
The South Asian country has recorded rapid growth in recent years and is still one of the fastest-growing major economies.
But its longer-term record shows the difficulty of sustaining the pace required for the 2047 objective. Growth averaged about 6.3 per cent between 2000 and 2024, according to the latest analysis.
The gap is particularly significant because the 9.25 per cent figure refers to nominal growth in per capita income rather than simply headline real GDP growth.
Inflation and population growth therefore form part of the calculation, making the transition dependent on sustained productivity gains, investment and income growth.
Lahiri has argued that India can achieve the target. He refers to the experiences of Japan, South Korea, Taiwan, Hong Kong, Singapore and China. But he has also stressed that rapid reforms would be essential to support the required acceleration.
Investment is one of the central concerns. India’s gross fixed capital formation has remained below 30 per cent of GDP for most years, compared with levels of 35 per cent or more recorded by several East Asian economies during their rapid development phases.
Lahiri has called for greater domestic savings and more efficient allocation of capital to productive sectors.
India’s major test
Manufacturing presents another major test. The sector has remained stagnant at around 16-17 per cent of GDP for more than a decade, limiting its potential to absorb India’s expanding workforce and create higher-productivity employment.
READ ALSO: July Witnesses India’s Lowest Factory Growth in Five Years
India also faces pressure from its external position and financial markets. The rupee has been among Asia’s weakest currencies this year.
The high global oil prices pose an additional risk for the country because of its heavy dependence on imported crude.
S&P Global Ratings recently maintained India’s sovereign rating at BBB with a stable outlook but cited weak fiscal performance, high debt and low GDP per capita as persistent constraints.
The government has sought to counter these constraints through infrastructure spending, manufacturing incentives, tax reforms and policies aimed at attracting domestic and foreign investment.
But economists say the scale and consistency of reforms will determine whether India can convert its strong headline growth into sustained gains in productivity, employment and living standards.
For Modi, the challenge is therefore not simply to keep India growing at around 7 per cent. It is to accelerate growth, raise incomes and sustain that momentum for a generation.
