A top official at the country’s central bank, the Reserve Bank of India, has made such a prediction that both the US and China may lose sleep over it. Yes, according to Reserve Bank of India (RBI) Deputy Governor Michael D. Patra, India can become the second-largest economy if it overtakes China on the economic front in the coming years.
At the same time, it may also become the world’s largest economy in the coming decades. In such a situation, there is not much time left for India to become the world’s largest economy. In the last financial year, the country’s GDP growth was over 8 percent. The RBI has estimated India’s economic growth in the current financial year at 7.2 percent.
When will it become the second largest economy?
Addressing the Indian Administrative Service officers at the Lal Bahadur Shastri National Academy of Administration in Mussoorie, Lt. Governor Michael D Patra said that given India’s strong fundamentals and inherent potential, the country will become the world’s second-largest economy by 2031. This means that China will fall behind India. He went on to say that by 2060, India could also become the world’s largest economy. These two words alone are enough to cause sleepless nights in the US and China.
How long can India’s growth last?
He said that for this, India will have to overcome several challenges related to labour productivity, infrastructure, contribution of manufacturing sector to GDP and greening of the economy for sustainable growth. He said that given the underlying strengths I have mentioned and the determination to achieve our aspirational goals, it is possible to imagine India becoming the second largest economy in the world in the next decade, not by 2048, but by 2031 and 2060, the largest economy in the world.
The senior Reserve Bank official said it has been estimated that if India grows at a rate of 9.6 per cent annually over the next ten years, it will break free from the lower middle-income trap and become a developed economy. Patra said its effect should also be visible on per capita income. However, by 2047, the per capita income of developed countries will have to reach US$ 34,000.
India ranks third in terms of PPP
He said that the current exchange rates determined in the market are going through a period of instability. Therefore, GDP measured in national currencies cannot be compared with that of another country. In such a situation, an alternative solution is purchasing power parity (PPP). It relates to the average price of goods and services in each country. Patra said that if we compare on the basis of PPP, the situation changes dramatically. On this basis, India is the third largest economy in the world. The Organisation for Economic Co-operation and Development (OECD) estimates that India will overtake the US and become the second largest economy in the world in terms of PPP by 2048.
