India can achieve 10 pc growth rate in next decade: RBI deputy guv
India can achieve a growth rate of 10
percent in the next decade and become the second-largest economy by 2032 and the
largest by 2050, given the energies and transformation driving the nation to overcome
its challenges, said RBI Deputy Governor Michael Debabrata Patra. He was
delivering a keynote address on The Indian Economy: Opportunities and
Challenges at Nomura’s 40th Central Bankers Seminar in Kyoto, Japan
on March 25.
India’s growth trend is on the cusp of
post-pandemic upshift, with early signs of it rising above 7 percent recorded
during the 2000s before COVID-19 struck, he said.
“India’s recent growth performance has
surprised many, triggering a flurry of upgrades. For instance, the
International Monetary Fund (IMF) has cumulatively revised its forecast for
2023 upwards by 80 basis points between April 2023 and January 2024,” Patra
said.
In this latest update, IMF expects
India to contribute 16 percent of global growth, the second largest share in
the world in terms of market exchange rates.
By this metric, India is the fifth
largest economy in the world and positioned to overtake Germany and Japan
within the ensuing decade.
In purchasing power parity (PPP)
terms, the Indian economy is already the third largest in the world.
The tailwinds driving the growth, the
deputy governor said, include favorable demography, the rupee being among the
least volatile currencies in 2023, and transformative change leveraged on
technology.
Patra further said inflation in India
is moderating after surging on multiple and overlapping supply shocks from the
pandemic, weather-induced food price spikes, supply chain disruptions and
global commodity price pressures following the Russia-Ukraine conflict.
However, inflation in India peaked
early in response to coordinated monetary-fiscal policies to anchor inflation
expecatations and dissipate idiosyncratic food price pressures, he said, adding
that inflation has fallen back into the tolerance band since September 2023.
“Given the innate strengths, I
described and the energies and transformation that are driving the nation to
overcome its challenges and achieve its aspirational goals, it is possible to
imagine India striking out into the next decade with a growth rate of 10
percent.
If this is achieved, India will become
the second largest economy in the world not by 2045 as shown earlier, but by
2032 and largest economy by 2050,” Patra said.
As regards the challenges before the
country, he said the contribution of labour to value added in India compares
poorly in a cross-country perspective-in terms of appropriate skills for a
specific job, only 51 percent is employable, highlighting the criticality of
the upskilling missions that are underway, such as Skill India that aims to
bridge the skill gap and enhance employability.
Increasing female labour participation
is a key challenge, he added.
“India’s manufacturing and services
must find expression in global markets- make in India for the world,” he noted.
The senior RBI official stressed that
intensified efforts are needed to raise India’s exports of goods and services
from USD 768 billion or 2.4 percent of the world total to USD 1 trillion each
for merchandise and service exports or 5 percent of the global by 2030.
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