Can India Prove the Naysayers Wrong?

"This is not a world in which you can pin your hopes on exports driving growth," said Dr Rahul Menon, an associate professor of economics at the O.P. Jindal Global University in Sonipat.

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He thinks it is "extremely unlikely" that India will reach a high-income status by 2047. "This would require India to sustain a roughly 9 per cent growth rate for the next 20 years. And that is very difficult in this global scenario," he told ST.

The World Bank, on the other hand, estimates India's economy will grow at 6.7 per cent for the next two fiscal years beginning April 2025.

India's early investments in health and education were also much weaker than in East Asian economies, leading to a workforce with poor educational and nutritional standards.

"So when the demographic dividend came, we were not in the best position to take advantage of it," said Dr Amit Basole, a professor of economics at Azim Premji University in Bengaluru.

India, he added, also had a restrictive regulatory framework and an "excessively centralised system of spending" that held back the growth of small firms and formal job creation. "In the East Asian case, there were large firms, but a lot of small firms also became dynamic... they became medium-sized and so forth, which resulted in a lot of firms with hundreds of employees something we just weren't able to do."

WHAT MUST INDIA DO?

The World Bank report recommends middle-income countries follow a "3i" approach that relies on ramping up "investment", along with the "infusion" of technologies from abroad and developing a domestic environment conducive to "innovation".