The Economic Survey has summed up the enormous task that lies ahead if we are to be a Viksit Bharat by 2047. The real GDP needs to grow at 8 percent for 20 years to achieve the average income of $10,000 per head—one of the targets set for 2047. Yet, the survey predicts the 2024-25 growth to be in the 6.5-7 percent range and 2025-26 at 6.3-6.8 percent. Even the medium-term prospects look worrisome, with both external and internal factors skewed against India.
India is at a crossroads where it faces the real risk of getting stuck in a middle-income trap. The demographic dividend could turn into a disaster if it fails to make its young population employable. What is more worrying is that job creation is facing a serious challenge amid the largely unfathomed threat from artificial intelligence. AI is not the only ‘known unknown’ that India will have to deal with. In the medium term, Donald Trump’s policy uncertainties are an even bigger threat to the global as well as domestic economies. Climate change is another, and so is the position of China in the global supply chain. With so many factors threatening to disrupt the global economy and change the world order, the survey calls for changing the status quo. ‘Business as usual’ carries the risk of stagnation, warns the Chief Economic Advisor (CEA), and rightly so.
It’s true that the government has, despite its many measures launched with good intentions, failed to lift private investment, consumption and manufacturing, which are key for job creation. The export sector, especially services exports, has reaped the benefit of a largely globalised world. But protectionism is growing and the developed world is looking more inwards than ever in the past three decades. Trump is threatening high tariffs if countries such as India do not fall in line. Even for foreign investments, India is no longer competing only with China or Vietnam—the CEA admitted that the US is a bigger competitor now. So India needs to overhaul its approach and policies to deal with the many economic challenges on the horizon. The Economic Survey 2024-25 is an honest reminder of it.