NEW DELHI: For India to become a developed country by 2047, its per capita income needs to rise from an estimated $2,813 in 2026 to around $18,000 in 2047 — a more than six-fold increase requiring average annual nominal growth of 9.25 per cent for 21 years, NITI Aayog Vice-Chairman Ashok Lahiri said on Thursday.
Speaking at an event organised by the National Council of Applied Economic Research (NCAER), Lahiri argued that the 2047 target was achievable but contingent on rapid reform. “Others have done it, so can India, but it needs support through rapid reforms,” he said, citing Japan, South Korea, Taiwan, Hong Kong, Singapore and China, which recorded comparable jumps during their high-growth phases.
Lahiri, who took charge at NITI Aayog in April, cited education, health, infrastructure and entrepreneurship, along with administrative reforms, law and order, and a faster justice system, as his “favourite” long-term growth priorities for India as the new vice-chairman.
On investment, he noted that India’s gross fixed capital formation has stayed below 30 per cent of GDP for most years, against 35 per cent or more sustained by East Asian peers. Yet he said India was using capital efficiently, with an incremental capital output ratio (ICOR) of 4.5 to 5, compared with China.
He cautioned, however, that the ICOR is “a crude measure of efficiency” and tends to rise with income. Growth, he added, depends on absorptive capacity: “An economy does not grow so much because it does not invest enough, but because its dynamism is not strong enough to enable it to apply more investment efficiently.”
Turning to savings, Lahiri said the rate peaked at 37 per cent in 2007, slipped to 29 per cent in 2020 and recovered to 35 per cent in 2025, but has consistently trailed China by 10 to 15 percentage points. He linked the shortfall to a persistent current account deficit of $16.5 billion in 2025, contrasting it with surpluses in China, Korea and Singapore, and said foreign direct investment inflows had remained limited relative to those economies.
Rejecting the view that India suffers from under-consumption, Lahiri said: “You can’t be talking about the savings rate being too low and at the same time saying under-consumption [is there].”
Investment, he argued, itself creates aggregate demand and drives technological progress. “The solution is not in saving less, but in saving more and efficiently intermediating that saving to the most promising sectors.”
Lahiri identified factor market imperfections in land and capital as major impediments and called for easing business at the grassroots. He pointed to entrepreneurship as a “hidden asset”. “Investment, both domestic as well as foreign, will flow in search of profits,” he said, urging India to become the most attractive location for running a successful business.
“Instead of too little investment and too little savings, let us have plentiful investment and adequate savings with efficient intermediation,” he concluded.
Source: Business Standard
