Will India@100 be an economic superpower?

A look at some scenarios about India's GDP and per capita GDP, and how it sits against the prospects of India becoming a developed economy by 2047

“It is, in sum, quite reasonable to assume that India will become a great power. It is not that hard to imagine that its economy will be of a similar size to that of the US by 2050,” Martin Wolf, chief economics commentator of the Financial Times, wrote on July 18.

This is the first of a two-part data journalism series looking at the prospects of India becoming a developed economy by 2047.

Wolf is not alone in his bullish views about the Indian economy’s prospects. The latest RBI bulletin published on July 17, has an article which provides “an indicative roadmap

The charts that matter

• 
  6% growth rate will make India a $17 trillion economy by 2047, 10% growth will result in a $34 trillion one

  India’s GDP according to the World Economic Outlook (WEO) database of the IMF is $3.8 trillion in 2023 (2022-23 according to the Indian fiscal year). IMF’s forecasts expect this number to increase to $5.6 trillion by 2028. If one takes the 2028 IMF projection as a base – to be sure, IMF projections do not always turn out to be true – it is possible to look at scenarios depending on the growth rate between 2028 and 2047 when India completes hundred years of its independence. Calculations show that India’s GDP could be anywhere between $14 trillion to $34 trillion depending on whether it grows at 5% or 10% during this 19-year period. If one uses the UN’s mid-year population projection for 2047 (1.65 billion) India’s per capita GDP in 2047 – it was $2600 in 2023 -- could range from $8503 to $20581 at these growth rates.
• 
  Where will India’s GDP be vis-à-vis US and China?

  One can take the IMF’s 2028 projections for the GDP of US and China and apply different growth rates – in all likelihood they are going to be significantly lower than India for the US and consistently lower for China – and see how will they compare to the size of the Indian economy. Even if US GDP has a CAGR of 1% between 2028 and 2047, it is likely to be higher than India’s GDP in dollar terms. The same holds for China’s GDP for any growth rate above 1% (in whole numbers). What about the gap in per capita GDP? One can use UN population projections for US and China to make this comparison and the gap is likely to be bigger than the GDP gap.
• 
  To be sure, the picture is very different in a PPP-terms comparison

  An inter-country comparison of GDP in dollars, while it makes sense given the dollar’s status as the dominant currency in the world, is not an accurate measure of the difference in level of well-beings. This is because a dollar’s purchasing power can be very different across countries. The accepted way to get around this problem is to use a Purchasing Power Parity (PPP) adjusted GDP comparison. Using PPP international dollar measure from the IMF’s WEO database shows that China is already the leading country in the world in terms of GDP and while India’s GDP gap vis-à-vis the US becomes smaller when measured on a PPP scale, its lag vis-à-vis China becomes much larger. It is on a PPP measure that commentators such as Martin Wolf expect India to overtake the US economy by 2050. An extrapolation of PPP measures of GDP is more complicated than US dollar-based measure because it will have to make assumptions about relative inflation levels in different countries.

The simple takeaway from the discussion so far is that even a business-as-usual growth performance will be enough to make the Indian economy significantly larger than what it is today in the next 25 years. Will this also mean a significant improvement in the living standards of a large number of Indians? This is a question which will be discussed in the second part of this series.

This is the first of a two-part data journalism series looking at the prospects of India becoming a developed economy by 2047. The second part will look at the context behind per capita GDP numbers and the headline GDP.