In a thought-provoking statement, former Reserve Bank Governor Raghuram Rajan has raised a red flag, indicating that India is at risk of remaining a lower-middle-income country unless its annual growth rate surpasses the 6% mark. Rajan’s concern extends to the projection that India could exhaust its demographic dividend by 2047 if substantial growth is not achieved.
Speaking at an event organized by Manthan, Rajan underscored the importance of accelerated economic growth, emphasizing that maintaining a 6% growth rate might result in India growing older before it gets richer. He expressed worry about the burden of dealing with an aging population without achieving significant economic prosperity.
Rajan delved into the specifics, pointing out that India’s current growth potential is approximately 6% per year. By extrapolating this rate, he noted that the country would remain in the lower-middle-income category until 2047. This projection raises critical questions about India’s ability to transition to a higher income status within the given timeframe.
He further highlighted the demographic challenges, stating that some southern states are already witnessing a decline in population growth. This trend could lead to an aging population, necessitating urgent economic measures to ensure a more favorable demographic scenario.
The former RBI chief expressed concern about the country’s current growth pace, deeming it insufficient to accommodate new entrants into the labor force and achieve the desired economic prosperity.
Rajan concluded his address by referencing Prime Minister Narendra Modi’s vision for India’s centenary of independence in 2047, terming it “Amrit Kaal” or the era of plenty. However, he stressed the need for robust economic growth to realize this vision and avoid the pitfalls of a lower-middle-income trap.
By PTI
