Developed countries typically offer their people a superior quality of life. In India, whose population has overtaken that of China, Prime Minister Narendra Modi has outlined an aspiration to make India a developed country by 2047. Over and above the developmental policies intended for nation-building, India needs a robust roadmap for developing its people to turn this aspiration into reality.
The United Nations Development Programme (UNDP) measures human development in countries through several parameters such as gross domestic product (GDP) per capita, health care access and life expectancy, literacy rate and education, political stability, electricity access, and a few others for a composite metric called the Human Development Index (HDI). HDI ranges from zero to one, and nations with a score of 0.80 to 1.00 are classified as developed. The rest of the nations are classified as developing, least-developed, or underdeveloped, depending on their scores. India’s latest HDI score is 0.644, and it ranks 134 out of 193 countries, which places it in the medium human development category.
Countries with a higher per capita GDP are known to have the ingredients of a developed country. The International Monetary Fund projected India’s nominal GDP per capita in 2024 to be $2,698, placing the country at 144 out of 194 economies. India is ranked 105th in the Global Hunger Index and aggressive measures beyond the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), mid-day meals and free rations are required.
For sustained incomes, India needs to create more jobs for its people. For this, it is imperative that the Indian economy grows at a much faster pace along with a lower growth rate for its population. The finance minister must go for an accelerated pace of reforms to remove all major irritants that impede economic growth and job creation. Some of these impending reforms include transforming the regulators, strengthening the legal system for enforcement of contracts, rejigging the trade policies vis-à-vis major economies, fast-tracking disinvestments, and making headway for the Direct Tax Code.
India spends barely 2% of its GDP on public health care, which is likely to keep the country away from the goal of universal health coverage, a non-negotiable for a developed nation. Making matters worse, many Indian cities remain on the list of the world’s most polluted cities whose residents’ health and life expectancy are adversely affected. Yet pollution control measures hardly become an issue during elections.
India’s public spending on education and skill development is just over 3% of its GDP. India is also home to the largest number of people lacking basic literacy in the world. At the current level of spending on education and skill development, India’s demographic dividend would remain untapped. In addition, India needs education reforms on a scale similar to that undertaken in China from 1985 to 1998, far beyond the New Education Policy, 2020.
Both health care and education pull down India’s HDI substantially. India must spend at least 3% and 6% of its GDP on health care and education, respectively. This year’s budget must herald a significant shift in this direction if India has to realise its dream of becoming a truly developed nation by 2047.
Infrastructure development plays a catalytic role in the economic growth of a nation. India’s transformation into a developed country depends on improving its infrastructure, especially urban development since cities drive economic growth. Based on a National Institute of Public Finance and Policy (NIPFP) study, every rupee spent on infrastructure results in a 2.5-3.5X gain in the country’s GDP.
On this front, India is doing somewhat better than it does in healthcare and education. In 2024-25, the government announced a spending level of infrastructure of ₹11.11 lakh crore ($133 billion), which is 3.4% of the country’s GDP and has doubled since 2021. The National Smart Cities Mission, an urban renewal and retrofitting initiative, has brought about only incremental improvements in urban areas; while a lot more needs to be done if cities are to emerge as powerful engines of double-digit growth.
India barely spends 0.64% of its GDP on scientific research and development (R&D), far below China’s 2.41%, the United States’ 3.47% and Israel’s 5.71%; it is behind every other BRICS and G20 nation. Intellectual property development by people and patent regime are essential for higher economic value-add to accrue to a country. Therefore, India’s R&D spending must be gradually increased to 2.5% of the GDP if we want to become an innovation-led economy in the foreseeable future.
India also must shift from an informal, unorganised, and agrarian entity to a services, manufacturing, and knowledge-centric economy, leveraging advanced technologies while ensuring sustainability. As people move away from agriculture, industry remains the biggest job creator. To accelerate job creation, India needs more domestic investment as well as foreign direct investments (FDI). India’s rank on the World Bank’s Ease of Doing Business improved to 63, but it must aspire to become a far more business-friendly country. Overseas investors expect regulatory certainty from the country, and therefore, continuity in key policies would be essential. Land acquisition and labour reforms are essential too.
It is hoped that India’s finance minister ushers in a radical shift in many of these sectors for the country’s eventual emergence as a developed nation by 2047. Leveraging its demographic dividend, India could also emerge as the skills capital of the world. Other key reforms would also be good news for businesses worldwide that wish to relocate a part of their manufacturing supply chains to destinations other than China, where India could emerge as a front-runner, creating jobs benefitting its burgeoning population.
Jayant Krishna is senior fellow, CSIS and the former CEO, NSDC – PM’s Skill India Mission; former Group CEO, UKIBC; founding CEO, FAST India; and former Regional Director, TCS. The views expressed are personal
