Developed India by 2047?

The Union Budget 2024-25 has a distinct objective: to set the foundation for a developed India by 2047, when the country marks its 100th year of Independence. In her speech, Union Minister of Finance Nirmala Sitharaman offered nine priority areas that will build this foundation. She termed it as the “Prime Minister’s Package” for a developed India. The priority areas include skilling and employment generation, youth development, agriculture, energy security and urban development besides a few others. The announcement gives one a feeling of déjà vu.

Earlier, the incumbent government in its first term (2014-19) had promised a deal for a “New India” by 2022, to mark the 75th year of Independence. This promised New India had similar priority areas as those for the developed India by 2047. But going by the latest assessment, none of the promises that defined New India has been fulfilled. A few such targets included making India a US $4 trillion economy, generating employment for women, doubling farmers’ income, and eradicating poverty (income poverty, not to be confused with multidimensional poverty).

During the 2022-23 budget speech—when New India was to be delivered—Sitharaman did not even mention the promise or its development goals. She did not mention doubling farmers’ income. Instead, she said, “This Budget seeks to lay the foundation and give a blueprint to steer the economy over the Amrit Kaal of the next 25 years—from India at 75 to India at 100.” One way, that budget had for the first time hinted about India becoming a developed country in the next two decades. In his Independence Day speech that year, Prime Minister Modi again promised that India would be a developed country by 2047. Are we on track to reach this milestone?

The World Bank, in a recent assessment, has “lauded” India’s ambition to go from a low middle-income economy to a developed country by 2047. But it has expressed real concern on India’s ability to get to this achievement.

The World Bank’s flagship “World Development Report 2024: The Middle Income Trap” crunches the experiences of the last 50 years and lays out how countries jump from one level to the next; in this case from middle-income level to the high- or developed-country level. The assessment has detailed a phenomenon called “middle-income trap” that hits most of such countries, stunting their growth and hindering them from becoming a developed country.

The trap is explained this way: as countries grow wealthier (even attaining the middle-income level), they stagnate at the stage when their per capita GDP (gross domestic product) is 11 per cent of US’ GDP per person—currently equal to $8,000. This figure is tentatively in the middle of the GDP per person range that qualifies a country as middle-income, according to the World Bank.

“Since 1990, only 34 middle-income economies have managed to shift to high-income status—and more than a third of them were either beneficiary of integration into the European Union, or of previously undiscovered oil,” says the World Bank report.

According to the World Bank’s classification, the world has 108 middle-income countries each with annual GDP per capita in the range of $1,136 to $13,845. This block of countries singularly defines the global growth, on both economic and development parameters. These countries are home to three-fourths of the global population and two-thirds of the population living in extreme poverty, even though they account for 40 per cent of the global GDP.

The report says that if the middle-income countries, including India, do not change their economic models, then “it will take China more than 10 years just to reach one-quarter of US income per capita, Indonesia 70 years, and India 75 years.”