MUMBAI (Reuters) – India will need to grow at a rate of 7.6% annually for the next 25 years to become a developed nation, according to a research paper published by the central bank in its monthly bulletin on Monday.
India’s per capita income is currently estimated at $2,500, while it must be more than $21,664 by 2047, as per World Bank standards, to be classified as a high-income country.
“To achieve this target, the required real GDP compounded annual growth rate (CAGR) for India works out to be 7.6% during 2023-24 to 2047-48,” according to the study by the Reserve Bank of India’s economic research department.
In nominal terms, which includes the impact of inflation, the economy would need to clock a CAGR of 10.6%, said the study, which does not represent the RBI’s official view.
“It may, however, be mentioned that the best (nominal growth) India achieved over a period of consecutive 25 years in the past is a CAGR of 8.1% during 1993-94 to 2017-18.”
To reach that level of sustained growth, India requires investment in physical capital and reforms across sectors covering education, infrastructure, healthcare and technology, the study said.
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The country’s industrial and services sector would need to grow at over 13% annually for these 25 years for India to achieve developed economy status, it said.
(Reporting by Ira Dugal; Editing by Savio D’Souza)