The golden era of Indian economy

The Border Security Force Camel Band parades on Republic Day at Rajpath, New Delhi, India, Jan. 26, 2015. (Wikimedia Commons)
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Updated 25 January 2023
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The golden era of Indian economy

  • The India of 2023 is very different from the India of 1947, and the India of 2047 will be different from the India of 2023
  • There is certainly much that is uncertain in the world, but there is also much of which we can be certain; within that band of certainty, it is impossible to dispute India’s inexorable economic rise

India recently celebrated 75 years of independence. The idea of “Amrit Kaal” builds on this with a road map for the next 25 years, taking us to 2047 when India will celebrate 100 years of independence.

The India of 2023 is, of course, very different from the India of 1947, and the India of 2047 in turn will be different from the India of 2023 in ways few can anticipate and project; if one casts one’s mind back, how many would have guessed the changes wrought in India over the past 25 years?

The world is an uncertain place, and in the long term even more so. While the future is always uncertain, the current state of the world has been permeated with an additional dose of uncertainty as a result of factors such as the COVID-19 pandemic, geopolitical tensions, the collapse of the multilateral system and regionalism, the retreat of advanced countries from globalization, and the dreaded warnings of “recession” in some of those countries.

These are external shocks that have been thrust on India, as they have on many emerging market economies, and underline the collapse of institutions that provide global public good, the Bretton Woods institutions included.

Global governance has yet to accept the rise of economies such as India. Lord Keynes is often quoted, usually out of context, as sharing the cliche: “In the long run we are all dead.” If one reads the complete text (“The Tract on Monetary Reform,” 1923), one will find his intention was not quite what this out-of-context quote might convey.

There is certainly much that is uncertain in the world, at present and for the long term. But there is also much of which we can be certain. Within that band of certainty, it is impossible to dispute India’s inexorable economic rise.

Much was made of the Goldman Sachs report “Dreaming with BRICS: The path to 2050,” when it was published in 2003. BRICS refers to the leading emerging economies of Brazil, Russia, India, China and South Africa.

It predicted an average real rate of gross domestic product growth in India of about 5.5 percent, with the rise in aggregate GDP and per capita GDP by 2050 explained by the nature of the exponential function.

The report did not include a projected figure for 2047 specifically but did give one for 2045: It predicted that India’s aggregate GDP would be $18.8 trillion, with per capita GDP of just over $12,000.

None of the reasons behind these optimistic projections have been nullified by the current global uncertainty — increase in savings/investment rates as a result of demographic transition and income growth, growth drivers in more efficient land, labor and capital markets and productivity enhancement.

To use an economist’s expression, India is still within the production possibility frontier, not on it. To put it another way, aggregate growth for India is a summation of growth in states, and states are within their respective frontiers, providing plenty of endogenous slack for growth.

Had events in the external world been more benign, India might have grown at 9 percent. Typically, one tends to extrapolate the gloominess of the present into the future. It is by no means obvious that global conditions will continue to be difficult for the next 25 years. But even if that were to be the case, India still might not grow at 9 percent. What growth rate seems reasonable, therefore?

The answer depends on the person making the projection and the assumptions that are made. A nominal figure depends on assumptions about inflation, which is why projections are often presented in real terms, in today’s dollars. A dollar figure also depends on assumptions about the dollar/rupee exchange rate, which is why projections are often based on the current exchange rate (the Goldman Sachs report assumed appreciation of the rupee vis-a-vis the dollar.) A prediction based on purchasing power parity is, naturally, different.

With inflation and exchange rate fluctuations out of the way, then, what trajectory of real growth in India sounds reasonable? The pessimistic forecaster will point to domestic inefficiencies and the state of the wider world and opt for 5.5 percent. The optimistic forecaster will point to empowerment through easier living and the provision of basic necessities, greater ease of doing business, supply-side reforms, and the government’s capital expenditure and opt for 7.5 percent.

That is the rough range of growth to consider, with recognition that as an economy grows, growth rates slow. As one moves up the development ladder, it becomes more difficult to grow as quickly, with the caveat that different states are at different levels of development and so there is plenty of slack.

To return to long-term uncertainty, one can plug in one’s own assumptions about real growth, say something like 6.5 percent, midway between the extremes of 5.5 percent and 7.5 percent. Based on that, India’s per capita income in 2047 would be something like $10,000 and the total size of the economy will approach $20 trillion.

These figures are broadly in the same range as the Goldman Sachs predictions, in which the role of exchange rate appreciation was relatively greater. In such projections, the role of real growth is relatively more.

If reforms succeed in driving economic growth higher than 6.5 percent — and such a “citius, altius, fortius” (faster, higher, stronger) possibility cannot be ruled out — the corresponding numbers will be higher.

Even with the relatively conservative figures, however, India would be the third-largest economy in the world, after the US and China, and this will naturally be reflected in India’s global clout. In a purchasing power parity ranking, India would be second-largest after China.

India’s annual rate of population growth has slowed and is now less than 1 percent. Nevertheless, in 2047, it will be the most populous country in the world, with a population of about 1.6 billion.

Expressions such as “developed country” are rarely used these days and the term no longer has a specific definition. The World Bank instead uses terms such as “middle-income.” India is currently classified as a lower-middle-income economy. By 2047, it will have moved to upper-middle-income classification.

When a country approaches a per capita income of $13,000, its status shifts to high-income. That will be when India can be said to be “developed.” In 2047, India will still fall short of this but the face of poverty in the country, as we know it, will have been completely transformed.

The measurement of poverty is based on the notion of a “poverty line” and, by using a multi-dimensional poverty index, the UN Development Program recently documented a sharp drop in the number of people in India categorized as “poor.”

As economies develop, the position of a poverty line of course shifts upward, beyond merely a subsistence level of consumption. Officially, however, the poverty line that continues to be used in India is still the Tendulkar poverty line. Unfortunately, consumption expenditure data, which is used to measure poverty, does not exist beyond 2011/12. Therefore different analysts now use different assumptions to measure poverty.

If, for example, one uses periodic labor force survey data and the Tendulkar poverty line, the poverty ratio (the percentage of the population below the poverty line) is currently about 17 percent. By 2047, it is forecast that this will have fallen to about 5 percent.

Sustainable Development Goal reports, among other analyses, have documented pockets of deprivation in specific geographical regions, which have been targeted by the government through its Aspirational Districts Program. India is a heterogeneous society and so despite the provision of basic necessities — such as physical and social infrastructure, financial inclusion, access to markets, technology and digital access — and an overall message of empowerment, there will continue to be pockets of poverty in the country, even in 2047.

But the nature of that poverty will be very different compared with today. India will have achieved universal literacy, or be pretty close to it. UNDP uses the Human Development Index, an aggregate measure, to gauge the development of people beyond poverty ratios. Currently, India is in the medium category of human development, based on HDI. By 2047, it will rank in the high category of human development.

There are five transitions underway and these will be even more pronounced by 2047. Firstly, there is a rural-to-urban shift, and urbanization correlates with development. By 2047, almost 60 percent of India’s population will be urbanized. It is predicted that Delhi and Kolkata will have populations of about 35 million, and Mumbai more than 40 million. The mind boggles at such figures and government programs are being developed with the aim of ensuring urbanization is better managed.

Secondly, there will be greater formalization of the economy. Such formalization is another factor that correlates with growth and development. Employees will have formal job contracts. Micro, small and medium enterprises will be legally registered. Indian companies will become larger, more efficient, and fully integrated into global supply chains.

Thirdly, the percentage of the population that earns a living from agriculture will decline. Agriculture’s share in gross domestic product will decline to something like 5 percent, and the percentage of the population earning a living from agriculture will not be more than 20 percent. Fourthly, there will be a shift in agriculture toward commercialization, diversification and larger farms.

Fifthly, there will be greater participation of citizens in governance, in keeping with the theme of “sabka prayas” (everyone’s effort). For years, there was a colonial chip on the nation’s shoulder. But present-day India is a proud India, a resilient India, an aspiring India. Amrit Kaal reflects that, and the country is making great strides on economic fronts, with greater confidence and entrepreneurship.

  • Bibek Debroy is the chairman of the Economic Advisory Council to the Prime Minister in the Government of India.

Malta offers to repair Gaza aid ship in drone strike row

A tug vessel puts out a fire on the Gaza Freedom Flotilla vessel Conscience outside Maltese territorial waters in this picture.
Updated 52 min 9 sec ago
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Malta offers to repair Gaza aid ship in drone strike row

  • Pro-Palestinian activists had pointed the finger at Israel for the attack
  • If the ship can be fixed at sea, it will be, but otherwise it will be towed under Maltese control to the Mediterranean island for repairs, paid for by Malta

VALLETTA: Malta offered on Sunday to repair an aid ship and send it on its way to Gaza after pro-Palestinian activists said the vessel had been hit by a drone strike.
But Prime Minister Robert Abela said the Freedom Flotilla Coalition must first allow a maritime surveyor on board to inspect the “Conscience” and determine what repairs are needed.
The pro-Palestinian activists had pointed the finger at Israel, which has blockaded the Gaza Strip throughout its military campaign against Hamas, for the attack.
If the ship can be fixed at sea, it will be, but otherwise it will be towed under Maltese control to the Mediterranean island for repairs, paid for by Malta.
“In the last few hours there was insistence that first the boat comes into Maltese waters and then the surveyor is allowed onboard,” Abela said.
“Before a vessel — any vessel — is allowed to enter Maltese waters then control must be in the hands of Maltese authorities, especially when we are talking about a vessel with no flag, no insurance.”
In an online press conference, members of the coalition who had been due to board the Conscience in Malta — including Swedish activist Greta Thunberg — said they had agreed to allow the inspection.
“When we received this offer from the Maltese government, we consulted with all of our Flotilla Coalition committee members who are on board,” said Brazilian FFC volunteer Thiago Avila.
“And their decision is that this is a good proposition from the Maltese government,” he said.
“As long as they can guarantee ... Conscience will not be stopped when it wants to leave on the humanitarian mission to take aid to Gaza.”
The activists explained the Conscience has no flag because the government of the Pacific nation of Palau had announced that they were withdrawing their registration on Friday, the day of the alleged strike.
Otherwise, they insisted they had made every effort to comply with international maritime law when embarking on the mission to take aid to Palestinians in Gaza.
According to the Flotilla Coalition, the Conscience was attacked in international waters as it headed for Malta on Friday, causing a fire that disabled the vessel and minor injuries to crew members.
Maltese and Cypriot rescuers responded. No government has confirmed the Conscience was the victim of drones, but Cyprus’s rescue agency said it had been informed by the island’s foreign ministry of an Israeli strike.
The Israeli military did not provide an immediate response when contacted by AFP.
First reported by CNN, a flight tracking service showed that an Israeli C-130 military cargo plane had been in the area immediately before the incident and had made several low altitude sweeps over the area.
Israel is known for conducting covert operations beyond its borders, including several during the Gaza war that it only acknowledged later.
The activists said the strike appeared to target the boat’s generator.
Thunberg told reporters that the incident should not distract from the focus of the boat’s mission to Gaza.
“What we are doing here is to try our very best to use all the means that we have to do our part, to keep trying to break the inhumane and illegal siege on Gaza and to open up humanitarian corridors,” she said.


Ukraine’s Zelensky: Ceasefire with Russia possible at any moment

Czech President Petr Pavel and Ukrainian President Volodymyr Zelensky review a military honor guard in front of Prague Castle.
Updated 04 May 2025
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Ukraine’s Zelensky: Ceasefire with Russia possible at any moment

PRAGUE: Ukrainian President Volodymyr Zelensky said on Sunday that a ceasefire with Russia in its more than three-year-old war is possible at any moment.
Zelensky, speaking at a joint news conference in Prague alongside Czech President Petr Pavel, also said that Ukraine hopes to receive 1.8 million shells in 2025 under a Czech initiative to provide military assistance.


Indonesian president inaugurates Hajj and Umrah airport terminal in Jakarta

President Prabowo Subianto, third from left, and Saudi Ambassador Faisal Abdullah Amodi inaugurate Hajj and Umrah Terminal.
Updated 04 May 2025
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Indonesian president inaugurates Hajj and Umrah airport terminal in Jakarta

  • Indonesian Hajj pilgrims have started departing for Saudi Arabia since Friday
  • Kingdom’s Makkah Route initiative will be implemented at new Hajj and Umrah terminal

JAKARTA: Indonesian President Prabowo Subianto inaugurated on Sunday a special terminal for Hajj and Umrah pilgrims at Jakarta’s international airport, where travel will also be facilitated under Saudi Arabia’s Makkah Route initiative.

Indonesia, which has the world’s largest Muslim-majority population, sends the highest number of Hajj and Umrah pilgrims every year.

As pilgrims around the world have already begun to make their way to Saudi Arabia for Hajj this year, about 221,000 people will be coming from Indonesia.

“The government wants to give the best service for our pilgrims. We also understand that many of our pilgrims are seniors, and so we must take very good care of them,” Subianto said during the inauguration ceremony at Soekarno-Hatta International Airport.

“We understand that our pilgrims have saved up for a long time, and even waited for a long time, and so the government under my leadership will do our very best to give the best services and work hard to lower the cost of Hajj.”

The airport’s 2F terminal area, which has undergone renovations, has been transformed into a dedicated area for Indonesia’s Hajj and Umrah pilgrims. It was developed to serve 6.1 million travelers annually, according to a statement issued by the Cabinet Secretariat.

The launch event was attended by Saudi Ambassador to Indonesia Faisal Abdullah Amodi, as well as other Indonesian ministers, including Religious Affairs Minister Nasaruddin Umar and State-Owned Enterprises Minister Erick Thohir.

Special counters for Saudi immigration, which are part of the Kingdom’s Makkah Route initiative, have also been set up at the new terminal.

The program launched in Muslim-majority countries in 2019 allows Hajj pilgrims to fulfill all visa, customs and health requirements in one place, at the airport of origin, and save long hours of waiting before and upon reaching the Kingdom.

In Indonesia, pilgrims departing from the cities of Jakarta, Surabaya and Solo are benefiting from the Makkah Route initiative.

“As President Prabowo said, this is proof of the government’s commitment to give the best service, especially for our senior pilgrims. He is also proud of the modern and comfortable facilities that have been set up,” Umar, the religious affairs minister, said on social media.

Thousands of Indonesian pilgrims have begun to depart for Saudi Arabia, after the first Hajj flights commenced last Friday.

Though the pilgrimage itself can be performed over five or six days, many pilgrims arrive early to make the most of the once-in-a-lifetime opportunity to fulfill their religious duty.

In 2025, the Hajj is expected to take place on June 4 and end on June 9.


Five policemen kidnapped in southwestern Pakistan

Updated 04 May 2025
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Five policemen kidnapped in southwestern Pakistan

QUETTA: A separatist militant group in southwestern Pakistan on Sunday claimed an attack on a prison van in which five police officers were taken hostage.
Between 30 and 40 gunmen blocked a major highway that cuts across Balochistan province overnight on Friday, intercepting a prison van being transported by a police team, a police official said.
“The prisoners were released later but five policemen have been kidnapped,” a senior police official in the area, who was not authorized to speak to the media, told AFP on Sunday.
He said a rescue operation was underway.
The gunmen also set fire to government buildings and a bank in the area.
A senior government official, who asked not to be named, said that two gunmen were killed by security forces.
Pakistan has been battling a separatist insurgency in Balochistan for decades, where militants target state forces, foreign nationals, and non-locals in the mineral-rich southwestern province bordering Afghanistan and Iran.
The Baloch Liberation Army (BLA), the most active group in the region, claimed the assault in Kalat district.
The BLA has previously targeted energy projects receiving foreign financing — most notably from China.
In March, the group seized a train, taking hundreds of passengers hostage and killing off-duty security forces in a three-day seige.


Two dead, 31 injured in Croatia bus crash

Updated 04 May 2025
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Two dead, 31 injured in Croatia bus crash

  • he health ministry, cited by state news agency Hina, said several badly hurt people had undergone operations in hospital

ZAGREB: Two people died and 31 people were injured when a Bosnian-registered coach and a car crashed into each other in Croatia on Sunday, police and medical staff said.
The accident occurred at 3:00 am (0100 GMT) on a busy freeway some 50 kilometers (30 miles) east of the capital, Zagreb.
The casualties were taken to nearby hospitals, police spokeswoman Maja Filipovic told AFP, adding that an investigation had been launched to determine the causes.
The health ministry, cited by state news agency Hina, said several badly hurt people had undergone operations in hospital.
Photos published by local media showed a double-decker bus lying on its side in the middle of the freeway with its windows broken.