Indian Express Editorial Analysis
01 March 2025
“India needs accelerated reforms to reach high-income status by 2047.”
(Source – Indian Express, Section – The Ideas Page – Page No. – 14)
Topic : GS3- Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
Context
India aspires to become a high-income nation by 2047, marking its centenary of independence. While the country has seen impressive economic growth, the path ahead requires bold reforms, institutional strengthening, and sustainable economic strategies. Without a sharp acceleration in reforms, India risks falling into the middle-income trap, where growth stagnates before reaching developed economy status.
India’s Growth Story: Progress and Challenges
Economic Achievements
- India is the fifth-largest economy, with a GDP of $3.7 trillion in 2024.
- Structural reforms like GST, Insolvency and Bankruptcy Code (IBC), and PLI schemes have boosted efficiency.
- Rapid digitalization and a thriving startup ecosystem have strengthened India’s global economic position.
Key Challenges
- Unequal Growth: Per capita income remains around $2,500, far from the World Bank’s $13,845 high-income threshold.
- Jobless Growth: While GDP expands, job creation in manufacturing and services lags, leaving many in informal employment.
- Investment Gaps: India’s investment rate needs to rise above 35% of GDP, requiring stronger capital mobilization.
- Structural Bottlenecks: Land, labor, and capital market rigidities continue to hinder efficiency.
Reform Imperatives: Learning from High-Income Economies
1. Industrial and Trade Reforms: A Manufacturing Push
India needs a strong manufacturing base to match China’s and East Asian economies’ trajectory.
✅ Strengthening Production-Linked Incentive (PLI) schemes to boost exports and global competitiveness.
✅ Focusing on semiconductors, AI-driven manufacturing, and green technology to create next-gen industries.
✅ Trade policy liberalization with deeper integration into global value chains (GVCs), leveraging FTAs.
2. Labor Market Flexibility: The Jobs Challenge
India needs to create 90 million non-farm jobs by 2030 to sustain growth.
✅ Implementing simplified labor codes across states to enhance hiring flexibility.
✅ Strengthening skill development programs aligned with Industry 4.0.
✅ Expanding social security and gig economy regulations for a more inclusive workforce.
3. Infrastructure-Led Growth: Unlocking Productivity
Investment in transport, digital infrastructure, and smart cities is key to sustaining momentum.
✅ Increasing public and private capital expenditure (capex) on roads, railways, and logistics.
✅ Expanding fiber-optic connectivity and 5G deployment to boost the digital economy.
✅ Strengthening urban planning and housing to accommodate rising urbanization.
4. Financial and Banking Reforms: Mobilizing Capital for Growth
India needs deeper financialization to ensure efficient capital allocation.
✅ Enhancing the role of corporate bond markets for long-term funding.
✅ Strengthening NBFCs and fintech regulations for credit expansion.
✅ Addressing stressed assets in the banking sector through faster resolution.
5. Climate-Resilient and Sustainable Growth
A high-income India must balance growth with environmental sustainability.
✅ Accelerating the transition to renewable energy, targeting 500 GW by 2030.
✅ Strengthening climate finance mechanisms to attract green investments.
✅ Expanding sustainable urban mobility solutions to reduce emissions.
Can India Replicate East Asian Success?
Countries like South Korea, Taiwan, and Singapore transitioned to high-income status through:
🔹 Export-led industrialization and tech-driven innovation.
🔹 Education and skill-building for a knowledge economy.
🔹 Proactive government policies ensuring ease of doing business.
Towards a Developed India: The 2047 Vision
For India to become a $30-35 trillion economy by 2047, it must ensure:
🔹 Sustained 7-8% annual GDP growth.
🔹 Per capita income of $15,000+.
🔹 Comprehensive economic and institutional reforms.
Conclusion
India stands at a pivotal moment in history. While its growth journey has been remarkable, the next 25 years require an accelerated reform push. By focusing on manufacturing, infrastructure, labor reforms, financial deepening, and sustainability, India can successfully break the middle-income barrier and emerge as a high-income powerhouse by 2047. The time for bold action is now.