Global brokerage
Morgan Stanley
, in its ‘The New India: Why this is India’s decade’ report, said that the country is poised for an
economic boom
in the coming years, driven by factors such as offshoring, manufacturing investments, energy transition, and advanced digital infrastructure. These drivers are expected to propel India to become the world’s third-largest economy and stock market by 2030.
As per the report, the
global economy
is being rewired for a multipolar world, influenced by geopolitical events like US-China trade tensions, Russia’s invasion of Ukraine, and the cost of sanctions.
The pandemic has also shifted the focus from “just in time” to “just in case” logistics. These factors have accelerated the move towards “slowbalization” and a multipolar world.
“The Indian government, for its part, is taking concerted policy steps to address issues that can help improve the competitiveness of domestic industry These include: reduced corporate tax rates, Production-Linked Incentive (PLI) schemes to push local manufacturing, labor reforms, and expansion of infrastructure,” the report said.
Now, Martin Wolf, a chief economics commentator at the Financial Times, has written an article claiming India is expected to become a superpower by 2047, but it is unlikely to become a high-income economy by that time.
Wolf believes that India’s
GDP per capita
would need to grow at 7.5% annually to achieve high-income status, which is unlikely due to global economic slowdowns and other factors. However, India is well-positioned to become a “rising great power” with an economy similar in size to that of the US by 2050.
Here are some key points from Wolf’s ‘Why India will become a superpower’ article.
Economic growth:
India’s GDP per capita is expected to grow at 5% annually, which could make its economy similar in size to the US by 2050.
To become a high-income economy, India’s GDP per capita would need to grow at 7.5% annually, which is unlikely.
Global economic context:
The global economic slowdown and a move towards de-globalization make it challenging for India to achieve high-income status.
The IMF has forecast an annual economic growth of over 6% from 2023 to 2028, which is feasible but not necessarily high-income
Population and size:
India’s population is projected to reach 1.67 billion by 2050, making it a significant player in the global economy
With a large population and a growing economy, India is likely to become a superpower, though not necessarily a high-income economy
Challenges and opportunities:
India faces internal challenges such as maintaining stability, improving education, and upgrading infrastructure to support economic growth
It has strengths such as a large domestic market, a young labor force, and a reasonably high savings rate, which can help it diversify and upgrade its economy over time
Strategic importance:
Western countries are making a “sensible bet” on India as a counterweight to China, which aligns with India’s strategic importance in the global economy
India’s diaspora is also influential, especially in the US, and can help facilitate trade and investment.
As per Wolf, While India’s path to becoming a high-income economy is uncertain, it is well-positioned to emerge as a global superpower by 2047, leveraging its large population, strategic alliances, and internal strengths.
