VISION FOR THE INDIA OF 2047

In India@100, Krishnamurthy Subramanian argues that India can be a 55trn economy by 2047 if it doubles down on the economic policies implemented in the last decade to grow at 8% annually. Although middle-income trap has plagued many developing countries in the past, he is convinced that India is well-equipped to avoid obstacles in its growth odyssey

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Eichengreen et al. (2013) found that growth slowdowns were more likely in economies with high old-age dependency ratios, high investment rates and undervalued real exchange rates. Bulman and others (2014) found that escapees from the middle income trap had higher TFP growth, faster transformations toward industry, better macroeconomic management and consistently more export orientation. Furthermore, countries with high secondary and tertiary education and with a larger share of high-tech products in exports are less likely to fall into the trap.

Does India Risk Falling into the Middle-Income Trap?

The evidence in this chapter shows that the middle-income trap is not a robust empirical or conceptual phenomenon. If the phenomenon itself is not very robust, the possibility of India falling into the middle-income trap becomes a moot point.