India is predicted to become a rising "great power" and its economy is expected to reach a similar size to that of the US by 2050, as stated by renowned economics commentator Martin Wolf.
He believes that Western leaders are making a wise bet on India.
Martin Wolf in a column for Financial Times noted that India has the potential to sustain a GDP per capita growth rate of around 5 per cent per year until 2050, and with improved policies, this growth could be even higher.
Wolf also emphasises that India is an ideal location for companies adopting a "China plus one" strategy.
It has the advantage of a large domestic market, giving it an edge over its competitors. India currently holds the position of the world's fifth-largest economy and the third largest in terms of purchasing power.
The United Nations has projected that India's population will reach 1.67 billion by 2050, compared to its current population of 1.43 billion.
According to Wolf, the country's bank balance sheets have been repaired and overall, the credit engine is in good shape.
He said, “Joe Biden’s warm embrace of the once-banned Narendra Modi, now its politically dominant Prime Minister, in Washington and Emmanuel Macron’s equally warm embrace of the Indian leader in Paris are aimed at forging a close relationship with a country expected to be a powerful counterweight to China.”
The International Monetary Fund (IMF) has predicted an annual economic growth rate of just over 6 per cent for India between 2023 and 2028. Additionally, GDP per capita is expected to grow slightly slower, at a rate of approximately 5.9 per cent.
In the same column Wolf confidently asserted that if India is not affected by major global or domestic shocks, the projected growth would align closely with the averages of the past three decades.
This seems quite feasible and even plausible, considering the significant potential for progress that still exists.
In addition, he emphasised that India is a youthful nation with a labor force that is largely under-utilised. There is ample opportunity to enhance the quality of this labour force, and the country boasts a reasonably high savings rate.
Furthermore, there is a growing sense of hope for greater prosperity among the population, he added.
The expert also noted that addressing the challenges of climate change will require substantial adaptation, particularly due to the failure to reduce global emissions.
However, he stated, the transition to cleaner energy sources presents significant opportunities for India to capitalise on.
According to Wolf, it is reasonable to believe that India will become a great power in the future. By 2050, India's economy is predicted to be around 30 per cent larger than that of the United States.
This has led western leaders to consider forming an alliance with India, recognising the potential benefits of such a partnership.
During his visit to India, World Bank President Ajay Banga highlighted the importance of domestic consumption in the country's economy.
He stated that a significant portion of India's GDP relies on local demand, which acts as a natural cushion against global economic slowdown.
According to Banga, this emphasis on domestic consumption helps to protect the Indian economy from external shocks.
Bhuvan Krishna is Staff Writer at Swarajya.
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