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Business News/ Opinion / Online Views/  India’s lost opportunity
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India’s lost opportunity

At current rates of growth, it will take another 60 years for India to reach developed country levels of per capita income

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The average Indian cannot aspire for a developed nation level of income for another 60 years if the economy plods along at the current growth rate. Before the financial crisis, when everyone was gung ho about India’s prospects, the consensus was that India’s per capital income would converge with that of developed nations by 2050, if not earlier. India would have to grow at a constant rate of 7.94% annually if it has to meet the 2050 projection, a recent report by Organisation for Economic Co-operation and Development (OECD) said.

That’s a good 3.2 percentage points over the current growth rate of 4.7%. With the Narendra Modi government in power now, if nothing else, there is at least an expectation that the economy will begin to recover soon. At a growth rate of 6.94%, India will converge with OECD levels of per capita income by 2062; another 1 percentage point increase in the growth rate means convergence will be reached in 2055, just five years later than the earlier projections.

If, miraculously, India’s growth path returns to the heady days just before the slowdown, then convergence with the OECD could happen even faster than earlier forecast. If the economy grows at 9.94% (which it came close to hitting between 2005 and 2008), it will reach OECD levels by 2043. But that is just fanciful thinking at this point of time unless structural reforms take place.

In any case, 2050 is a long way off, and the global economy has a habit of throwing up surprises. Suffice it to say that the ongoing slowdown has destroyed an entire generation’s chances of living at developed nation levels of income.

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Published: 31 Jul 2014, 12:04 PM IST
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