India to become $30-trillion economy by 2047: Niti draft vision document

October 30, 2023
Posted by: OptimizeIAS Team
Category: DPN Topics

India to become $30-trillion economy by 2047: Niti draft vision document

Subject : Economy

Section: National Income

In News: India is estimated to become a $30 trillion developed economy by 2047, preliminary results from the Centre’s vision document which is being prepared have shown, Niti Aayog.

Key Points:

India is currently estimated to be the fifth largest economy with a GDP of $3.7 trillion.
Several estimates show that India’s GDP is expected to overtake Japan and Germany by 2030. Ratings agency S&P estimates that India’s nominal GDP will rise from $3.4 trillion in 2022 to $7.3 trillion by 2030.
The preliminary estimates of the Centre’s vision document project the Indian economy to a $30 trillion developed economy by 2047.
Going by the preliminary numbers provided by the Niti Aayog, estimates show that the economy will need to post an annual average economic growth of 9.2% between 2030-2040, 8.8% between 2040-2047 and 9% between 2030 to 2047.
NITI Aayog Vision Document:
- The vision document will outline the structural changes and reforms needed to reach the objective of becoming a 30-trillion dollars developed economy by 2047.
- It will include government process re-engineering, reforms and cut down on duplication of work by different ministries and departments. It is also expected to have details about the country’s global engagement on trade, investment, technology, capital, research and development entities.
- The strategy will also include implementation roadmaps and will have measures to ensure that the economy does not fall into the “middle-income trap”.
- The document is also expected to outline which Indian companies would be global leaders and also the strategy for creating an ecosystem needed to achieve the goal.
- It will also have details about creating human capital to achieve the vision, how to leverage the country’s market size and how to address regional disparities. The vision document will also detail the roadmap where India will be in 2030 and in 2047.
- The document is likely to be presented by December 2023.

Middle Income Trap

A middle-income trap is a situation in which a country attains a certain average income and gets stuck at that level, failing to graduate to a high income group.
The term was introduced by the World Bank in 2007 and is defined by them as the ‘middle-income range’ countries with gross national product per capita that has remained between $1,000 to $12,000 at constant (2011) prices.
According to the World Bank definition, the middle-income trap “refers to a situation whereby a middle-income country is failing to transition to a high-income economy due to rising costs and declining competitiveness“.
A middle-income trap is a scenario where the country’s economy is unable to transition to the higher per-capita income levels.
Low-income countries often tend to transition faster to middle-income levels, driven by low wages, cheap labour and basic technology catch-up. However, only a few countries manage to achieve high-income status.
There is no consensus around the theory of middle-income trap. It was and is still hotly debated among many economists and policymakers around the world as to whether such a trap really exists.
Historically, some evidence suggests that Latin American and Middle Eastern countries suffered middle-income traps for at least four or five decades. According to a World Bank report, out of 101 middle-income countries in 1960, only 13 countries achieved high-income status by 2008 based on per capita income level relative to the United States.
The most recent examples being Brazil and Mexico, which were touted to transition to developed economies, but failed to achieve the same success as Japan or some countries in the Eastern Europe.
Insufficient development of domestic innovation capabilities is at the heart of the middle-income trap.
Globalization poses certain challenges for middle-income countries to narrow the capabilities gap because they have less time to do so with more players competing in the innovation space and with technological innovation changing faster.
Middle-income countries need to embrace a strategy focused on capability to advance innovation, move up the value chain, and create decent jobs.