The government has set a target to make India a developed economy by 2047, under the ‘Viksit Bharat’ banner, to meet this goal, the Finance Ministry said that the country would have to grow by 8 per cent each year over the next 10 years, Reuters reported.
The ministry told lawmakers that over the next decade, India’s economy needs to expand around 8 per cent annually amid rising geopolitical uncertainties. It expects this growth to come from domestic demand and investments, the report added.
“Ideally, the Indian economy will need to grow by around 8 per cent in real terms every year, at least for a decade,” the finance ministry said in its reply to a parliamentary committee in June, according to a report released on August 19.
India’s growth estimates
The government estimates India’s growth at 6.3-6.8 per cent in this financial year through March 31 (FY 2024-25), broadly in line with the 6.5 per cent growth recorded last year, but much lower than the 9.2 per cent notched in FY23-24
The comments align with economists estimates of 8-9 per cent annual growth requirement for India to hit the Viksit Bharat 2047 target, the report added.
Further, the ministry added that in order to become a developed economy by the targeted date, India would also have pump its investment rate to around 35 per cent of GDP from the close to 31 per cent at present.
The 50 per cent tariff could shave growth by up to 40 basis points in 2025-26, the report noted.
Notably, the ministry’s estimates were made in June, before the US imposed additional 25 per cent tariffs (taking total to 50 per cent) on India, which US President Donald Trump said was “punishment” for buying oil from Russia.
India-US trade talks faced a setback earlier this month as New Delhi did not agree to give Washington access to its vast agriculture and dairy markets. India is prioritising enhanced opportunities for its labour-intensive exports, including textiles, apparel and leather goods, the finance ministry said.
