India has the potential to become the second largest economy by 2031 and the largest in the world by 2060, according to Michael Debabrata Patra, Deputy Governor of the Reserve Bank of India (RBI). Speaking at a program at the Lal Bahadur Shastri National Academy of Administration in Mussoorie, Patra outlined a bold vision for India’s economic future.
“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,” Patra stated during an event of the Mid-Career Training Programme for officials of the Indian Administrative Service on July 9.
Highlighting India’s remarkable journey in economic development, Patra noted that during the last financial year, 2023-24, India became a USD 3.6 trillion economy. “India had become a ₹295.4 lakh crore or USD 3.6 trillion 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’,” he said.
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Patra emphasized that for India to achieve the status of a developed economy, it would need to sustain a growth rate of 9.6 percent per annum for the next decade. “If India can grow at the rate of 9.6 percent 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,” he asserted.
The Organisation for Economic Cooperation and Development (OECD) projects that in purchasing power parity (PPP) terms, India will overtake the US by 2048 to become the second-largest economy in the world.
Addressing concerns about rising inflation, Patra reassured that the RBI is committed to aligning inflation with its targets, projecting inflation to ease to 4.1 percent by 2025-26. “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 percent in 2024-25 and 4.1 percent in 2025-26. The taming of inflation lays the foundations of sustained high growth in the future,” he explained.
In addition to economic growth and inflation control, Patra highlighted the improvement in the banking sector’s health. He noted that gross non-performing assets (GNPAs) in the banking system have steadily fallen from their peak in March 2018 to 2.8 percent of total assets by March 2024. Adjusted for provisions, net NPAs stand at just 0.6 percent. “The capital and liquidity buffers of the country are well above the regulatory norms,” he added.