The Deputy Governor of the Reserve Bank of India (RBI), Michael Debabrata Patra, stated that India has the potential to become the world’s second-largest economy by 2031 and the largest by 2060. This statement was made at an event for the Indian Administrative Service on July 9 at the Lal Bahadur Shastri National Academy of Administration.
Patra said, “It is possible to imagine India striking out into the next decade to become the second largest economy in the world not by 2048, but by 2031 and the largest economy of the world by 2060.”
Throughout his speech, Patra showed confidence in India’s economic strategies. He highlighted India’s development journey as eventful and mentioned how India became a USD 3.6 trillion-dollar economy during the last financial year.
Patra asserted that “India had become a ₹ 295.4 lakh crore or USD 3.6 trillion dollars’ economy at current exchange rates. At a per capita income of ₹ 2,07,030 or USD 2,500, India belongs in the lower middle-income group of countries. Reaching here has been an eventful and arduous journey, marked by what statisticians call ‘structural breaks”
According to him, “If India can grow at the rate of 9.6 per cent per annum over the next ten years, it will break free of the shackles of the lower middle-income trap and become a developed economy.”
OECD Predictions
The Organisation for Economic Cooperation and Development (OECD) has predicted that India will overtake the US by 2048 to become the second-largest economy in the world, in purchasing power parity (PPP) terms.
He explained the PPP as “An alternative measure is purchasing power parity (PPP). It is the price of an average basket of goods and services in each country. With PPP, the comparison changes dramatically. In terms of PPP, India is the third largest economy in the world. The $5 trillion milestone for 2027 translates to $16 trillion in PPP terms.”
Addressing the rising inflation Patra said, “RBI has anchored expectations by remaining committed to aligning inflation with the target and regards the recent easing of price pressures as work in progress. It projects inflation to average 4.5 per cent in 2024-25 and 4.1 per cent in 2025-26. The taming of inflation lays the foundations of sustained high growth in the future.”
Patra also highlighted that the gross non-performing assets (GNPAs) in the banking system have steadily fallen from their peak in March 2018 to 2.8 per cent of total assets by March 2024. he further predicted that the general government debt which currently stands at 81.6% will decline to 73.4% by 2030.
According to Patra, “Our projections show that if expenditures are increased on reskilling/upskilling the labour force in the most productive sectors of manufacturing, investing in digitalisation and promoting energy efficiency, the general government debt will fall even further to 73.4 per cent of GDP by 2030-31.”
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