Will India become a developed country by 2047? India, a land of immense diversity and potential, aspires to achieve the status of a fully developed country by 2047—the centenary of its independence.

While the vision is bold and inspiring, the road to realization is fraught with challenges and opportunities that require a concerted effort across multiple economic and social development dimensions.

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What defines a developed country?

According to the International Monetary Fund (IMF), a developed country is characterized by several factors, including:

• High living standards for its people
• Robust per capita income among citizens
• A diverse industrial base
• A global financial sector integration that connects the country to international markets

The IMF uses three primary criteria to classify advanced economies:

• GDP per capita: The total value of goods and services produced in a country, divided by its population.
• Export diversification: A developed country must have a varied export base, rather than relying on a few commodities.
• Integration into the global financial system: This includes the volume of international trade and participation in international financial institutions.

In addition to these economic indicators, other factors like the Human Development Index (HDI)—which measures education, health, and overall well-being—are also crucial in determining a nation’s development status. As India aims for global prominence, it will need to address these key areas to determine if it can truly achieve developed country status by 2047.

GDP Per Capita (in PPP) and India’s Current Status

Let’s begin by considering GDP per capita in Purchasing Power Parity (PPP), which is a more accurate measure of living standards.

• GDP per capita is calculated by dividing a country’s total GDP (the value of all final goods and services produced) by its total population. This indicator reflects the average production capacity of the population, thereby offering insights into the standard of living.
• GDP per capita in PPP adjusts for inflation and accounts for the differences in the cost of living across countries. This makes it a better tool for comparing living standards internationally.

Currently, Luxembourg has the highest GDP per capita in PPP at $132,414, while India ranks 118th with a GDP per capita of $9,172.

To be classified as a developed nation, India would need a GDP per capita in PPP of at least $40,000. For context:

• Japan: $46,268
• United Kingdom: $54,126
• United States: $73,637

India’s Growth in GDP Per Capita (in PPP)

India’s GDP per capita growth over the last 8-9 years has averaged around 4.1% annually. Here’s a look at the data for recent years:

Projections for India’s GDP Per Capita (in PPP) by 2047

Given that India’s current GDP per capita stands at $9,172, and the country’s average growth rate of 4.1%, it would take India until 2061 to reach a GDP per capita of $40,000. To reach that level by 2047, India would need to increase its growth rate to approximately 6.33% annually.

• For the USA level of GDP per capita ($73,637): India would need an average growth rate of 9.03%, which is a highly ambitious target.

Conclusion: Achieving Developed Nation Status

For India to become a developed nation, one of the key indicators is GDP per capita in PPP, which reflects living standards. India needs to reach at least $40,000 per capita (in PPP) from its current position of $9,172. With the current growth rate of 4.1%, India would not reach this goal until 2061. However, with targeted efforts to boost growth to around 6.33%, India could reach the $40,000 level by 2047.

Achieving this requires strategic interventions in technology, innovation, infrastructure, education, policies, trade, and enhancing labor productivity across sectors. To match the developed economies like the USA by 2047, India would need sustained growth rates of around 9.1% in GDP per capita, a challenging but potentially attainable goal with focused efforts.

Export Diversification and India’s Status

India’s export performance over the past decade provides key insights into the country’s trade dynamics. Let’s break down the data:

India’s Exports (in Billion USD)

The table below shows the growth of India’s exports over the last 10 years, which increased from $289.6 billion in 2012 to $452.7 billion in 2022.

While the export figures have shown an upward trend, it is essential to consider inflation and real growth in exports. For instance, an item that was exported for $100 in 2012 may now fetch $1,000 in 2022, which could distort comparisons if only nominal values are considered.

Trade Deficit: A Persistent Challenge

India has consistently experienced a trade deficit over the last decade, where imports exceed exports. This imbalance has several implications:

In 2022, India’s trade deficit was $279.88 billion, highlighting the persistent gap between exports and imports. The trade deficit often weakens the domestic currency, as India needs to convert its currency (rupees) into foreign currencies (e.g., US dollars) to pay for imports, increasing the demand for foreign currencies and reducing the demand for the rupee.

Implications of a Trade Deficit on the Indian Economy

A trade deficit suggests that India is spending more on foreign goods and services than it is earning from exports. To finance this gap, India relies on foreign exchange reserves or borrows from international markets, increasing its dependency on foreign currencies like the US dollar. This, in turn, can lead to a depreciation of the Indian rupee.

For example, if India imports more oil, electronics, and machinery (from countries like Saudi Arabia, the USA, and China) than it exports textiles, software services, or agricultural products, it creates an imbalance. To pay for these imports, India needs to exchange rupees for dollars, increasing the demand for dollars and reducing the rupee’s value.

Addressing the Trade Deficit

The Indian government has downplayed concerns about the rising trade deficit, with Commerce Secretary Sunil Barthwal noting that a growing economy naturally leads to higher demand for imports. As India’s economy grows faster than the global average, the demand for foreign goods may outpace its export capacity. The government also highlighted India’s robust foreign exchange reserves, which reached a record high of $675 billion as of August 2023. These reserves can cover approximately 11.6 months of imports, offering a cushion against trade imbalances.

Additionally, India’s services exports have been performing well, with services exports estimated to have grown by over 10% between April and August 2023, providing another buffer against the trade deficit.

Looking Ahead: Boosting Exports and Reducing Imports

For India to achieve sustainable growth and balance its trade, it is essential to focus on:

• Export Diversification: India needs to reduce its dependency on a limited set of export commodities and boost high-value exports like technology, pharmaceuticals, and automobiles.
• Building Small and Medium Industries: Developing small and medium-sized industries can increase domestic production of key raw materials, machinery, and electronics, reducing the dependency on imports.
• Government Interventions: Strategic trade policies, better infrastructure, and enhanced trade agreements could foster a more balanced trade equation, improving India’s position in global markets.

In conclusion, while India’s export growth has been encouraging, the persistent trade deficit remains a significant challenge. By diversifying exports, reducing unnecessary imports, and strengthening its manufacturing capabilities, India can improve its trade balance and reduce its dependency on foreign currencies. This, in turn, would help stabilize the rupee and support India’s ambitions to become a developed country by 2047.

Make in India Initiative: Progress and Challenges

Introduction
Launched on September 25, 2014, the Make in India initiative aimed to transform India into a global manufacturing hub, targeting key areas such as job creation, foreign direct investment (FDI) attraction, and boosting the manufacturing sector’s contribution to India’s GDP. The primary goals of the initiative were:

1. Making India the manufacturing hub of the world
2. Increasing the manufacturing sector’s share in India’s GDP to 25% by 2025
3. Creating 100 million additional jobs in the manufacturing sector by 2022 (revised to 2025).

As the initiative nears its 10th anniversary, it’s time to assess the progress made and the challenges faced in achieving these ambitious objectives.

Key Goals of the Initiative

The Make in India initiative had three major goals:

• Increase the manufacturing sector’s growth rate to 12-14% per annum.
• Create 100 million additional jobs in the manufacturing sector by 2025.
• Raise the manufacturing sector’s contribution to GDP from the current 16% to 25% by 2025.

However, progress towards these goals has been mixed, with significant challenges hindering full realization of the targets.

Growth in the Manufacturing Sector in India post Make in India

The manufacturing sector’s contribution to India’s Gross Value Added (GVA), a more accurate measure of economic productivity than GDP, is a key indicator of growth. GVA accounts for the total output minus the cost of raw materials used in production, giving a clearer picture of net economic output.

Data on the manufacturing sector’s share in GVA (2011-12 to 2022-23) reveals the following:

As seen, the manufacturing sector’s contribution to GVA fluctuated but ultimately decreased from 17.4% in 2011-12 to 16.9% in 2022-23, falling short of the target of 25% by 2025. While there was some growth, the manufacturing sector has not achieved the substantial increases anticipated under the Make in India initiative.

In 2023, the manufacturing sector’s GDP share was around 13%, showing stagnation rather than significant growth.

Challenges Confronting the Manufacturing Sector

Despite various efforts, India’s manufacturing sector faces several barriers:

1. Low Productivity: Manufacturing productivity in India remains low compared to global competitors, impacting competitiveness.
2. Capital and Investment Issues: Limited access to capital and investments in technology and research & development (R&D) hampers productivity.
3. Regulatory and Policy Hurdles: Bureaucratic inefficiencies, complicated labor laws, and lengthy land acquisition processes create challenges for both domestic and foreign investors.
4. Global Supply Chain Challenges: Geopolitical shifts, the COVID-19 pandemic, and competition from countries like Bangladesh and Vietnam have further constrained growth in low-cost and labor-intensive manufacturing sectors.

Job Creation in the Manufacturing Sector

The Consumer Pyramids Household Survey from the Centre for Monitoring Indian Economy (CMIE) reports a significant decline in employment within the manufacturing sector. Between 2016-17 and 2022-23, the number of persons employed in manufacturing fell by approximately 1.57 crore (15.7 million).

While the initiative aimed to generate millions of jobs in the sector, the reliance on capital-intensive industries and the challenges in labor law reform contributed to insufficient job creation, especially for India’s growing youth population.

Key Achievements of the Make in India Initiative

1. FDI Growth: The initiative successfully attracted higher Foreign Direct Investment (FDI) in sectors like telecommunications, automobiles, and pharmaceuticals. Policies aimed at improving the ease of doing business helped draw investments.
2. Infrastructure Development: Investments in industrial corridors, ports, and logistics have enhanced connectivity and improved the infrastructure necessary for manufacturing.
3. International Awareness: The initiative raised India’s profile as a viable destination for global manufacturing, making it a competitor to countries like China and Vietnam.

Challenges and Criticism

Despite these achievements, several issues have hindered the success of the Make in India initiative:

1. Stagnant Manufacturing Share: The manufacturing sector’s share in GDP has stagnated at around 16–17%, far below the targeted 25%.
2. Inadequate Job Creation: The initiative failed to create sufficient employment opportunities, particularly in labor-intensive industries.
3. Slow Policy Implementation: Delayed labor reforms, complex regulatory procedures, and bureaucratic hurdles have slowed the pace of progress.
4. Global Competition: Countries like Vietnam, Bangladesh, and China have continued to outpace India in terms of manufacturing exports, particularly in low-skill, low-cost sectors.

Recommendations for Course Correction

To realize the full potential of the Make in India initiative, the following steps are crucial:

1. Focus on Labor-Intensive Sectors: Policymakers should prioritize labor-intensive industries like textiles, footwear, and electronics, which generate more jobs per unit of investment.
2. Streamline Regulations: Further simplify regulations and improve the business environment, particularly for Small and Medium Enterprises (SMEs).
3. Enhance Skill Development: Improve skill development programs to align with industry demands, especially in emerging technologies like AI, robotics, and clean energy.
4. Strengthen Global Value Chains: Expand trade agreements and reduce tariffs to make Indian products more competitive globally.
5. Accelerate Infrastructure Investment: Speed up investments in critical infrastructure like ports, railways, and energy to facilitate manufacturing growth.

Conclusion-Make in India

While the Make in India initiative has made progress in attracting FDI, improving infrastructure, and raising India’s global profile, it has faced challenges in achieving significant growth in the manufacturing sector and creating enough jobs. To meet the ambitious targets of boosting manufacturing’s share in GDP to 25% and creating millions of jobs, targeted reforms, simplification of regulations, and a stronger focus on labor-intensive sectors are essential.

India must embrace these reforms, enhance its manufacturing capabilities, and foster an environment that supports sustainable growth, to truly become a global manufacturing hub.

Human Development Index (HDI): Progress and Outlook for India’s Development by 2047

Introduction
The Human Development Index (HDI), developed by the United Nations Development Programme (UNDP) in 1990, is a composite measure used to evaluate and compare the levels of social and economic development of countries. Unlike GDP, which focuses purely on economic growth, HDI emphasizes people-centered development, measuring achievements in health, education, and standard of living.

HDI is calculated based on three principal dimensions:

1. Health: Life expectancy at birth.
2. Education: Measured by mean years of schooling for adults aged 25 and older, and expected years of schooling for children entering the education system.
3. Standard of living: Gross National Income (GNI) per capita, adjusted for purchasing power parity.

India’s progress in these key areas will be critical to its vision of becoming a developed nation by 2047

India’s HDI Progress

India’s HDI value for 2022 stands at 0.644, placing it in the Medium human development category, ranked 134th out of 193 countries and territories. This reflects significant improvements in health, education, and income over the past few decades.

From 1990 to 2022, India’s HDI has increased from 0.434 to 0.644, an impressive growth of 48.4%. Despite this progress, India remains far from the high HDI values seen in developed nations, which typically have an HDI of 0.8 or higher.

Global Comparison

While India has made notable strides in improving its HDI, its value still lags behind many developed nations. According to the World Population Review, most developed countries have an HDI of 0.8 or higher, with Norway, Switzerland, and Ireland often topping the list.

For India to reach the HDI benchmark of 0.8, it must close the gap of approximately 33% (moving from 0.644 to 0.8). Given India’s progress over the past three decades, achieving this goal by 2047—when the country celebrates its centenary of independence—seems well within reach.

HDI Comparison: India vs. Developed Nations

• India’s HDI (2022): 0.644
• Developed Nations HDI (typically): 0.8 or higher

India’s HDI Growth Rate: Can India Achieve 0.8 by 2047?

India has experienced rapid growth in its HDI over the last few decades:

• 1990 HDI: 0.434
• 2022 HDI: 0.644
• Increase in HDI: 48.4%

This steady growth suggests that India can continue to improve its human development indicators, with the possibility of reaching an HDI of 0.8 by 2047. If the pace of improvement continues, India is likely to experience advancements in key areas:

1. Health: India’s life expectancy has increased substantially over the years, with more focus on healthcare infrastructure and services.
2. Education: Improvements in literacy rates and school enrollment, combined with initiatives like the National Education Policy (NEP), will contribute to progress in this dimension.
3. Income Levels: With a growing economy, rising GDP per capita, and expanding job opportunities, India’s standard of living is expected to improve, further boosting HDI.

Achieving HDI 0.8 by 2047 would signify that India is making substantial strides towards improving its health, education, and economic welfare, bringing it closer to the level of developed nations.

India’s Path to an HDI of 0.8 by 2047

1. Health Improvements:
   • Continued investment in public health infrastructure and universal healthcare programs like Ayushman Bharat will improve life expectancy.
   • A focus on nutrition, clean water, and sanitation can further enhance health outcomes.
2. Education:
   • Expanding primary and secondary education access will improve mean and expected years of schooling.
   • Strengthening higher education and vocational training will help close the education gap, ensuring a more skilled workforce.
3. Economic Development:
   • Focus on inclusive economic growth, ensuring that economic progress benefits all sectors of society, especially the rural and disadvantaged.
   • The Make in India initiative and other efforts to boost manufacturing, technology, and infrastructure can raise GNI per capita, further boosting India’s HDI.

Challenges in Achieving HDI of 0.8 by 2047

While the path forward is promising, India faces several challenges that could slow its HDI progress:

1. Income Inequality: Economic growth has been uneven, with significant disparities between urban and rural areas. Ensuring equitable development is essential.
2. Education Quality: While enrollment rates have improved, the quality of education remains a concern. Strengthening teacher training and curriculum development is crucial.
3. Healthcare Access: Though health outcomes have improved, access to quality healthcare remains uneven, particularly in rural areas.

Addressing these challenges will require sustained efforts, strategic policy interventions, and significant investments in education, health, and infrastructure.

Conclusion-HDI for India

India has made substantial progress in improving its HDI, increasing its value by nearly 50% between 1990 and 2022. If this pace of improvement continues, India is likely to achieve an HDI of 0.8 by 2047, which is typically associated with developed nations.

Achieving this milestone will require a continued focus on enhancing healthcare, education, and economic opportunities for all sections of society. If India can address challenges like income inequality, education quality, and healthcare access, it will not only reach the HDI 0.8 threshold but will also have made significant progress toward becoming a developed nation by its centenary of independence in 2047.

Conclusion-Will India become a developed country by 2047

India has made remarkable progress in some areas, especially in terms of GDP. We’re currently the 5th largest economy in the world and are projected to become the 3rd largest by 2030. We’ve also done exceptionally well in IT/ICT services exports, contributing over 60% of global exports in this sector.

Our biometric identification system, Aadhaar, has enabled the government to coordinate public services for the world’s largest population. And India is home to world-class universities, particularly the Institutes of Technology and Institutes of Management.That’s a huge achievement!

However, as we’ve seen in this video and the previous one in the series, India struggles with equitable growth and improving the standard of living for everyone. While we’ve made great strides as an economy, the wealth distribution remains skewed. For example:

India is home to 167 billionaires, but at the same time, 129 million people live below the poverty line.

In terms of GDP per capita, which reflects the average income or productivity of individuals, we rank 129th out of 200 countries. At the current growth rate, we might take until 2075 to catch up with developed nations like the USA.

We also discussed how programs like Make in India have not lived up to their potential so far. Moreover, India has been running a persistent trade deficit, spending more on imports than we earn from exports.

Let’s break down some of the reasons behind India’s sluggish performance in areas like economic disparity, GDP per capita, trade deficits, and challenges in programs like Make in India.

Key Issues Affecting India’s Growth

Lack of focus on MSMEs – The Backbone of the Economy

Micro, Small, and Medium Enterprises (MSMEs) are crucial for India. They generate the majority of jobs, especially for people who don’t have the skills to work in multinational companies. They also contribute significantly to GDP and exports. However, MSMEs face several challenges:

• Lack of capital: Many unorganized MSMEs struggle to access loans because they don’t have adequate collateral.
• Complex government policies: Initiatives like demonetization and the GST rollout caused major disruptions for MSMEs, further limiting their growth.

On the positive side, schemes like Account Aggregator and support from organizations like GIZ are helping bridge some of these gaps. But more investment and targeted support are needed.

Corruption

Corruption remains a significant problem in India. It’s no secret that corruption hampers growth by undermining the very policies and programs designed to promote development. When funds meant for public welfare are siphoned off, the intended benefits don’t reach those who need them most. Tackling corruption is essential to ensure that India’s growth plans are effectively implemented.

Education

While India boasts some of the world’s top institutions, like the IITs and IIMs, our primary education system is still weak. Institutions like the IITs and IIMs produce a small number of highly skilled workers, but the majority of the population remains unskilled and unemployable.

Private education: Quality primary education in India often comes at exorbitant prices, making it inaccessible to many.

Government schools: Many government schools suffer from poor infrastructure, unqualified teachers, and administrative inefficiencies.

However, there are signs of hope. For example, the Delhi government’s efforts under AAP to revamp public schools have been commendable. If similar reforms are implemented across India, we could create a more educated and productive workforce, setting the foundation for long-term growth.

Protectionism

Recently, the Indian government has introduced protectionist policies to boost domestic production, such as increasing tariffs on imports. While this is intended to strengthen initiatives like Make in India, it might not be the right time for such a strategy.

Here’s why:

India’s domestic production infrastructure is still developing, both in terms of industries and workforce readiness. For protectionism to work, we first need to strengthen our MSMEs through investment, education, and training. Once our industries are more competitive and prepared, protectionism could become a viable strategy.

While India has achieved a lot, we still face challenges like economic disparity, low GDP per capita, and trade imbalances. Addressing these issues requires focused efforts to improve education, fight corruption, and provide better support to MSMEs. If these challenges are tackled effectively, India will be better positioned to achieve its goals and sustain equitable, long-term growth.