Is there anyone in India who does not dream of their country joining the ranks of developed nations? The Prime Minister's aspiration to transform India into a developed nation by 2047 is undeniably commendable. However, the debate lies in how to achieve this vision. Are the policies implemented since 2014 sufficient to realise this dream? Or is the slogan "Viksit Bharat 2047" merely another catchy phrase to secure electoral victories?

The target is ambitious: transforming India into a $30 trillion economy by 2047 from its current $3.4 trillion GDP. This aspiration is grounded in India's status as the world's fastest-growing economy, with an 8.2% growth rate projected for the financial year 2023–24. Nevertheless, the country faces substantial challenges: high unemployment, rising inequality, skill gaps due to inadequate educational policies, and more.

What Defines a Developed Nation?

There is no universally accepted definition of a developed country. However, key indicators include GDP, Gross National Income (GNI), per capita income, industrialisation, infrastructure, technological advancement, and overall living standards. The Human Development Index (HDI), which accounts for health, education, and income, is another important measure.

Economists differ on the per capita GDP required for developed status. Some suggest $12,000–$15,000, while others argue for $25,000–$30,000. India's per capita income is approximately $2,400, compared to $76,400 in the US and $12,700 in China. India's HDI score of 0.633 ranks it 132nd out of 192 countries, far below the threshold of 0.8 generally associated with developed nations.

High per capita income alone does not ensure development. For example, Qatar boasts a per capita income of $88,000 but remains classified as developing due to income inequality and limited access to quality education.

The Middle-Income Trap and India's Challenges

According to the World Bank's World Development Report 2024, it may take India 75 years to reach one-quarter of the US's per capita income. This highlights the "middle-income trap," where a country's growth stagnates after reaching a certain income level. India's economic growth since 1991 has been largely consumption-driven, fuelled by the top 15–20% of the population. However, the remaining 80% still face poverty and limited opportunities, challenging sustained growth.

Rathin Roy, a former member of the Prime Minister's Economic Advisory Council, in an interview with Karan Thapar in The Wire (India May Fall into Middle Income Trap and May Never Become Viksit), has explained the nature of the middle-income trap of India. India's top 10 to 20% of the population lead a prosperous life with the best possible facilities, education, health care, etc., whereas the remaining 80% face the problems of a poor country. According to him, since 1991, India's economic growth has been propelled by the consumption of luxury goods like big houses, expensive cars, air conditioners, refrigerators, etc. This cannot go on for a long time. India will remain a middle-income country as long as a sizable section of the population cannot increase their income and consumption.

Although India is the fastest-growing economy, it has failed to generate enough jobs for its large and expanding young population as the country's economy is capital-intensive. India's domestic unemployment rate has remained above 7% for many years, and the urban youth unemployment rate has exceeded 20%. The poverty level will be further aggravated when more unemployed people are thrown into the market. Besides, the bulk of the jobs created are in the informal sector with low wages, which has led to income inequality.

Though India has one of the largest working-age populations in the world – over 65% of the total population, it has one of the lowest labour force participation rates (LFPR)- 55.4%, below the global average (60%).

Another problem is that many in India's workforce are poorly educated or illiterate. Only about 14% of the existing labour force has received vocational training, and the proportion of formally skilled workers in the total labour force is as low as 3%. This reality highlights the huge disparities in the country's rich and poor education levels. The education system remains underfunded and misaligned with industry needs, resulting in a workforce that lacks the necessary skills for high-value industries. India's investment in education, around 3% of GDP, pales in comparison to South Korea's 10%.

Persisting poverty is another challenge. According to the latest UN report (Multidimensional Poverty Index), India has 234 million people living in absolute poverty, the most in the world. In the 2024 Global Hunger Index, India ranks 105 out of the 127 countries. With a score of 27.3 in the 2024 Global Hunger Index, India has a level of hunger that is serious.

Rathin Roy has suggested a shift in the economic policy presently focused on producing luxury goods for 150 to 200 million rich people. He has suggested a large-scale production of goods and services used by the majority of people, covering five areas: 1) Food- Agriculture, 2) clothing, 3) affordable housing, 4) quality education and skill upgradation, and 5) quality health care for all.

The income of farmers is to be substantially increased so that many people will leave the farming sector and be available for other sectors. The government must make surplus land (land with Railways, military cantonments, and public sector enterprises) available for housing. Land can be allotted to needy people for a 99-year lease. The manufacturing sector, especially small and medium industries, focusing on the goods used by most people, is to be promoted.

This strategy is to be implemented through coordinated efforts by the samaj (society), sarkar (government), and bazar (entrepreneurs). The government must lead this process through dialogue with the other two partners.

A Multi-Faceted Strategy for Development

In order to escape the middle-income trap, India has to adopt a multi-faceted strategy. Firstly, India needs to increase its investment in human capital development by enhancing financial allocation for education and health care. Quality education and skill development should be available for all children and young people. The current practice of providing good-quality education to the rich, who can pay high fees, and poor-quality education to the poor is to be stopped by ending the commercialisation of education.

A second priority has to be creating jobs on a large scale for the young people of India. This requires focusing on manufacturing by promoting Medium, Small, and Micro Enterprises (MSMEs). Instead of giving tax breaks and tax cuts to big businesses, the MSMEs are to be supported through loans at a low interest rate and tax concessions. Crony capitalism, the unholy nexus between the political class and the business class, has to come to an end.

Fostering inclusive growth is another significant strategy. The increasing inequality between the rich and the poor is to be responded to by ensuring equitable access to education, healthcare and economic opportunities, especially for the marginalised sections of the population. There must be balanced growth between the rural and urban areas to reduce the influx of people from the villages to the cities. Implementing the suggestion of APJ Abdul Kalam, our former president, "Providing Urban Facilities in Rural Areas(PURA)," will be very helpful in reducing migration from rural to urban areas.

Other steps include increased spending on Research and Development (R&D) to at least 2% of GDP, encouraging startups, expanding digital infrastructure to rural areas to enhance productivity and enable e-commerce, improving infrastructure, increasing investment in green energy, improving governance and reducing corruption.

Social Harmony: A Key to Development

Economic progress cannot thrive without social harmony. Divisive politics and policies undermining the values enshrined in the Constitution are detrimental to long-term growth. India's diversity should be celebrated, not suppressed. Imposing uniformity or prioritising majoritarian ideologies will hinder the nation's progress.

India has the potential to become a developed nation by 2047, but achieving this goal requires bold, inclusive, and transformative policies. The focus must shift from superficial growth metrics to addressing structural issues that hinder equitable development. Only by aligning economic strategies with constitutional values and fostering unity in diversity can the dream of a "Viksit Bharat" become a reality.