Blueprint for prosperity

India is on the track to become the world's third-largest economy by 2028, surpassing both Japan and Germany. This is indeed a noteworthy achievement and will considerably enhance India's standing in the eyes of the world. The story of reforms, initiated in 1991, is responsible for giving this growth momentum to the Indian economy. Today, India's GDP stands at USD 3.7 trillion, while Germany's is at USD 4.3 trillion, and Japan's is at USD 4.4 trillion. We are still far behind the USA at USD 26.9 trillion and China at USD 19.4 trillion. However, the encouraging news is that the Indian economy has maintained a steady rate of growth over the last 20 years. It took India from 1947 to 2007 to surpass the USD 1 trillion GDP milestone. Impressively, India accelerated from USD 1 trillion to USD 2 trillion within just seven years after 2007. In fact, when considering GDP at purchasing power parity (PPP), India already ranks as the world's third-largest economy, with a GDP of USD 13 trillion, following the USA at USD 26.9 trillion and China at USD 33 trillion. India's PPP ratio is 3.5, while China's stands at 1.7.

Angus Maddison, in his remarkable book ‘Contours of the World Economy 1-2030 AD - Essays in Macroeconomic History,’ has said that in the year 1 AD, India's GDP represented 32 per cent of the world's GDP. This figure declined to 28.1 per cent by 1000 AD and further decreased to 24.4 per cent in 1700 AD, plummeting significantly to a mere 4.2 per cent in 1950. India's population in 1 AD accounted for 33.3 per cent of the world population. Between 1 AD and 1000 AD, India's GDP stagnated at USD 33.75 billion, with a steady population of 75 million. However, from 1000 AD to 1700 AD, India's population surged to 165 million, and the GDP tripled to USD 90.7 billion. By 1950, the GDP had risen to USD 227.22 billion, accompanied by a population increase to 359 million. Despite the growth in GDP and population during this period, India's overall share in the world economy experienced a drastic decline. This was because we missed the industrial revolution as colonial masters harnessed India's resources to fuel their economic growth. The population increase became particularly significant after 1921 which is known as the year of great divide as the discovery of antibiotics brought down the death rates considerably.

According to a recent projection by the IMF and Goldman Sachs, if the current momentum continues, India's GDP in 2075 is estimated to reach USD 52.5 trillion. This would surpass the projected GDP of the USA in 2075, which is estimated at USD 51.5 trillion. China is expected to be marginally ahead at USD 57 trillion. Meanwhile, countries like the UK, Japan, and Germany would lag far behind, with GDPs of USD 7.6 trillion, USD 7.5 trillion, and USD 8.1 trillion, respectively. This data unequivocally suggests that the 21st century is poised to be the Indian century. India would once again contribute a major share to the world economy just like it used to do centuries ago. Of course, this would mean that the Indian economy continues at its current growth rate. For this to happen we need constant reforms and take the right policy decisions which would stimulate the economy, otherwise, there is always a danger of falling into a middle-income trap.

The above scenario is indeed a cause for jubilation. However, before we rush to celebrate, we must take a closer look at the other side of the coin. India's per capita income today stands at USD 2,601, or USD 9,073 in terms of PPP. This places India among the world's lowest, with a global ranking of 128th in terms of per capita income. This fact should be a cause for concern and should humble us, making us realise that we need to grow at a much faster rate if we intend to provide our citizens with a quality of life comparable to that offered by middle-income countries. It is indeed chastening to note that the per capita income of the USA is approximately USD 80,000, China's is USD 13.72 thousand, Germany's is USD 51.38 thousand, the United Kingdom's is USD 46.31 thousand, and Japan's is USD 35.39 thousand.

It is now being recognised by all that GDP, by itself, is the most imperfect measure of economic development, as it conceals more than it reveals. Maximising growth alone does not necessarily enhance human well-being. As Robert Kennedy famously said, GDP does not measure anything that makes life worthwhile. Per capita income gives a far better appreciation of the level of economic development, and when we consider this factor, it becomes evident that India has a long way to go.

The country must focus on holistic development of its citizens. To achieve this, indicators such as HDI (Human Development Indicator) and GNH (Gross National Happiness) hold more relevance in assessing the quality of life for the people. Incidentally, India ranks at the bottom of the list in both these indicators globally. While we may be tempted to become defensive and question the methodology and motives behind these rankings, we cannot ignore the reality. These indicators include measures of health, education, nutrition and others, and there is no escaping the fact that we perform poorly in these attributes as compared to other countries.

The fortunate aspect is that we possess a large youth population which, if properly harnessed, will yield significant demographic dividends. However, we must also be concerned because the flip side is that this advantage can potentially turn into a disaster. To avert such a situation, we need to provide our youth with gainful employment where their full potential is realised, and they make substantial contributions to boosting productivity in the economy. Unfortunately, India's growth story over the last decade or so has been characterised by jobless growth, and this trend requires immediate reversal. Generation of employment has to occupy the pole position in our priorities. The youth must be made ready for jobs by providing them a high quality of education, skill development and proper healthcare. Our transformation to a developed economy is only possible if we develop and utilise our human resource potential to the maximum extent.

India is still an agriculture-dominated economy and this sector also requires the highest attention of our policy planners. If the farmer is not economically empowered, then the economy will not be able to move to a path of high sustainable development. Furthermore, the MSME sector needs a lot of hand holding if it has to grow and provide employment. Physical infrastructure like roads and power should continue to provide the launching pad for a high trajectory of growth. Women must become equal partners in the process of growth.

While we have attained the status of the fifth-largest economy, we must take a series of urgent steps in the aforementioned areas if we aim to fulfil our vision of becoming a developed economy by 2047. The government and its policy planners must maintain an unwavering focus on the holistic development of the country's citizens, ensuring they enjoy a high quality of life and well-being.

The writer is an ex-Chief Secretary, Govt of Uttar Pradesh. Views expressed are personal