Entrepreneurial Dynamism in India https://www.kdpublications.
in
ISBN: 978-93-94570-69-6
1. India "Developed" Country by the year 2047!
Study on Economic Indicators- Current Position and
Projection towards 2047
Dr. G. Kumar
Assistant Professor,
College of Management,
SRM Institute of Science and Technology,
Kattankulathur, Chennai, Tamil Nādu, India.
Dr. S. Jahira Parveen
Assistant Professor,
College of Management,
SRM Institute of Science and Technology,
Kattankulathur, Chennai, Tamil Nādu, India
Mr. R. Saranraj
MBA,
Karpaga Vinnayaga Institute of management,
Pudukkottai, Tamil Nadu, India.
Abstract:
The purpose of the study is analyzed India’s opportunity and challenges
to become developed economy in 2047. The international organizations
UN and World Bank differ in explaining the developing economy and
developed economy. These organizations recommend Gross National
Income per capita and Human Development Index for measuring the
developing or developed economy. The study adopts both indicators for
measuring the developing of developed economy status of the country.
The HDI-Human development index is a statistical tool developed by
United Nations, it composed of four areas schooling, gross national
income per capita and life expectancy at birth. The GNI can be
calculated by GDP, plus Net Receipts, property income less subsidies.
The secondary data were collected from the various international
organisations like World Bank, International Monetary Fund, Reserve
Bank of India, trading view and business magazines websites.
1
Entrepreneurial Dynamism in India
The data were analysed with data visualizations tools and projection
techniques. The study finds that currently India’s economy is in the lower
middle income economy stage. India to reach the developed economy it
has to reach two thresholds. To reach the developed economy status
India requires steady and consistent 10% growth in the next 25 years.
The challenges are Global slowdown, poverty, literacy, inequality.
Keywords: Developed Economy, Developing Economy, Human
Development Index (HDI), and Gross National Income per capita.
1.1 Introduction:
Is it realistic to expect India to become a developed nation by the year
2047? Has Prime Minister Narendra Modi given the country an
impossible goal? India's economy would be required to expand at an
exponential rate in order for it to be considered "developed" in the
following 25 years. And to do that, it must implement generation-next
changes and make significant progress on measures of human
development. China has demonstrated that it is feasible. India is a
contrast-filled country. In some aspects, it resembles a developed nation,
although it lags behind on most socioeconomic metrics.
Countries are typically referred to as "developing" if they still have
relatively high levels of poverty and if they trail behind on basic
development indicators. India has achieved significant progress over the
past few decades, especially following the landmark reforms that took
place in 1991, but the country still has a way to go in terms of
fundamental human development & socio-economic indices.
In India, hunger, poverty, illiteracy, and unemployment have not yet
been totally eliminated from the country. The fundamental infrastructure
of India is currently undergoing modernization, including the country's
electrical grid, roadways, trains, aviation system, and maritime network;
however, there is still a long way to go. In contrast, developed
economies, such as those that are members of the G7 or OECD, have
excellent standards of living and have nearly eliminated extreme poverty,
which is something that can be seen in many regions of the developing
world, particularly in Asia and Africa. They have a strong showing in
terms of general socioeconomic metrics as well as human development.
2
India "Developed" Country by the year 2047! Study on…
1.2 Review of Literature:
1.2.1 Developed Nation:
(Masdukiet. al 2022) It is common practice to label a country as
"developed" if it satisfies a set of predetermined socioeconomic criteria.
Having an economy that is already sufficiently developed is sometimes
all that is required for this to be the case. In cases where that alone is
insufficient, additional qualifiers may be used instead. These may
include, but are not limited to, a country's GDP or a. GNI per capita, b.
its level of industrialization, its general standard of living, c. the amount
of technological infrastructure it possesses. In most cases, these factors
are connected to one another in the year 2020, the United Nations will
classify as "developed" a total of 36 countries. (Colmenares et. al 2021)
Every developed nation could be found in either North America or
Europe, or in what was referred to as "Developed Asia and Pacific."
1.2.2 Developing Country:
(Nainggolanet. al 2022) If a country does not satisfy the socioeconomic
requirements, it is commonly accepted that the country is still in the
"developing" stage. To put it more succinctly, these are most frequently
nations that have a. a lower per capita income, b. a less established
industrial base, c lower standard of living e. limited access to modern
technology. As a direct consequence of this, developing nations
frequently struggle to provide adequate levels of employment, food, and
clean drinking water, as well as education, medical care, and housing.
The United Nations estimates that 126 countries will still be classified as
"developing" in the year 2020. All of the countries that were considered
to be in a state of development were found in either a. Africa, b. Asia, c.
Latin America d. Caribbean. Because of differences in how developed
and developing countries are defined, some organisations consider
countries like a. Mexico, b. Greece, and Turkey to be developed while
others consider them to be developing.
(Nurvita ET, al 2022) According to the regulations of an international
or bilateral agency, like the World Trade Organization, a country's
development status is one of the factors used to determine whether or not
that country is eligible to receive development aid (WTO).
3
Entrepreneurial Dynamism in India
This is probably the primary reason why there are so many different
definitions of "developed" versus "developing," as each organisation has
different requirements for what should be considered the former in order
to be eligible for their assistance.
This binary is frequently insufficient for classifying large, complex
territories, which is another reason why the terminology is inconsistent:
For example, in 2016, the World Bank announced that it would no longer
differentiate between developing countries and developed countries
because the terms were no longer considered relevant. This was done
because the World Bank believed that the distinctions between the two
groups were no longer necessary.
1.2.3 Gross National Income:
(Capelli et. al 2016) The gross national income (GNI) is equal to the
sum of the gross domestic product (GDP) plus any factor income (wages,
interests, profits, etc.) received from other countries, less any factor
income that was paid to those countries by the receiving country. The
Indian people now have a common goal in mind. During his statement
on the anniversary of Independence Day, Prime Minister Narendra Modi
established a goal to make India viksit (developed) by the time she
celebrates her 100th anniversary of independence.
In this endeavor, the hierarchy established by the World Bank might
prove to be more beneficial. The Bank's categorization, which is based
on GNI per capita, is more straightforward. It classifies countries as
having low, lower-middle, upper-middle, or high incomes. Given that
there is a powerful relationship between wealth and human development
and that countries within the same income group typically exhibit similar
trends regarding education, health, or governance, and given that there is
also useful beyond the realm of economic analysis,
1.2.4 Human Development Index (HDI):
(Farida et. al 2022) The Human Development Index (HDI) is an
additional measuring device that was developed by the United Nations
as a metric to assess the levels of social and economic development of a
particular nation.
4
India "Developed" Country by the year 2047! Study on…
The Human Development Index (HDI) is a standardized measurement
that converts a. life expectancy, b. educational attainment, c. income into
a number between 0 and 1; the closer a country is to 1, the more
developed it is. (Herdikaet, al 2022) There is no set threshold that must
be met for a country to be considered developed; however, the vast
majority of developed nations have Human Development Index of 0.8 or
higher.
The life expectancy component of the HDI is computed at the time of
birth and ranges from a value of zero to a value of one, with zero
representing a life expectancy of 20 years and one representing a life
expectancy of 85 years.
Measures of education include the average number of years that residents
of a country have spent in school and the number of years that are
typically completed by the time a child reaches the age at which they first
enroll in kindergarten. (Listiyaniet, al 2022)
Finally, the metric chosen to represent the standard of living is GNI
(gross national income) per capita based on purchasing power parity
(PPP).
1.3 Gross National Income Analysis:
The gross national income (GNI) is equal to the sum of the gross
domestic product (GDP) plus any factor income (wages, interests,
profits, etc.) received from other countries, less any factor income that is
paid to those countries by the receiving country. Mint conducted a
forecasting exercise to achieve this.
As with the World Bank's Atlas method, mint omitted the effects of
inflation and exchange rates to keep things straightforward. The GNI
(current prices, $), from 2022–2023 onward, was assumed to grow at
various rates for three scenarios, and per capita figures were calculated
by dividing the GNI by the UN's projected midyear population of the
given year.
According to the compound annual growth rate (CAGR) over the
previous 25 years, the income thresholds were updated.
5
Entrepreneurial Dynamism in India
1.3.1 Assuming India's GNI: Scenario 1:
Figure 1.1: Assuming India's GNI: Scenario 1
Source: https://www.livemint.com/opinion/online-views/can-india-
become-a-developed-country-by-2047-11660812773790.html
In the first scenario, it is assumed that India's GNI will increase at a
CAGR of 8.5% or at the rate of the previous 25 years for the ensuing 25
years. By 2033–2034,
India would reach upper-middle income status at this rate. But in 2046–
2047, its GNI per capita would be $14,041, falling just short of the set
limit of $18,079 (see Chart 1a).
6
India "Developed" Country by the year 2047! Study on…
1.3.2 Assuming India's GNI: Scenario 2:
Figure 1.2: Assuming India's GNI: Scenario 2
Source: https://www.livemint.com/opinion/online-views/can-india-
become-a-developed-country-by-2047-11660812773790.html
One more caution is added in the second scenario. The remaining 2020s
are projected to see GNI grow at a CAGR of 8%, which is closer to the
7.5% growth rate experienced between 2010–11 and 2019–20.
Additionally, as the size of the economy expands, it is predicted that GNI
growth will slow down to 6% in the 2030s and 4% in the 2040s, which
is typical of many middle-income nations like South Africa and Brazil.
7
Entrepreneurial Dynamism in India
Under such a scenario, it makes sense that the minimum threshold is even
harder to reach. India might fall into the middle-income trap because its
GDP won't even reach $8,000 by 2046–2047. (See Chart 1b)
1.3.3 Assuming India's GNI: Scenario 2:
Figure 1.3: Assuming India's GNI: Scenario 2
Source: https://www.livemint.com/opinion/online-views/can-india-
become-a-developed-country-by-2047-11660812773790.html
The third scenario, which is the most upbeat one, assumes that GNI will
increase at a CAGR of 10% for the following 25 years. India would
achieve high income status in 2045–2046, a year before the country's
100th anniversary of independence, if it can somehow achieve such a
strike rate.
8
India "Developed" Country by the year 2047! Study on…
The minimum required GNI growth rate is 8.9% for India to touch the
high-income threshold by 2046-47. India does not have to keep a
constant 10% nominal growth rate year after year, but only on an overall
basis. Between 2000-01 and 2010-11, India's GDP grew at an annualized
rate of 12.4%, with a minimum of 2.8% and a maximum of 19.8%. The
question is whether India can replicate its spectacular performance in the
2000s, despite the fact that its economy has grown multifold since then.
1.4 Human Development Index (HDI):
1.4.1 HDI Dimensions and Indicators:
Figure 1.4: HDI Dimensions and Indicators
Source: https://hdr.undp.org/data-center/human-development-
index#/indicies/HDI
The Index of Human Development examines three fundamental aspects
of human development: a. long & healthy life b. knowledge, c. decent
standard of living. The index is calculated using four indicators: a. life
expectancy at birth b. mean years of schooling c. expected years of
schooling d. gross national income per capita. The Human Development
Index (HDI) is calculated by taking the geometric mean of the
normalized indices for each of the three dimensions. The education
dimension is defined by the mean number of years adults have spent in
school who are at least 25 years old, as well as the expected number of
years children who are old enough to start school will spend in school.
9
Entrepreneurial Dynamism in India
The health dimension is measured by the life expectancy at birth. The
gross national income per capita is the metric that is utilized to evaluate
the standard of living. The logarithm of income is used in the Human
Development Index (HDI) to reflect the decreasing significance of
income with increasing GNI.
After that, the results of the three HDI dimension indices are averaged
together to create a composite index using the geometric mean. HDI
quantifies a. life expect any, b. educational attainment, c. income into a
standardized number between 0 to 1. The value closer to one called as
developed country. For developed country no minimum value specified.
But most developed countries have the HUMAN DEVELOPMENT
INDEX of 0.8 or greater. Human Development index less than 0.8 value
considered as Developing country category.
1.4.2 India position on HDI Key indicators:
Figure 1.5: India position on HDI Key Indicators
Source: https://www.livemint.com/opinion/online-views/can-india-
become-a-developed-country-by-2047-11660812773790.html The
10
India "Developed" Country by the year 2047! Study on…
economic indicator like a. Gross National Income b. per capita income
c. literacy rate d. gross enrolment e. infant mortality rate f. Maternal
Mortality rate g. life expectancy rate more important indicators in
deriving Human Development Index. The figure depicts the India’s
current position on economic indicator discussed above. The figure
shows that the life expectancy at birth doubled in last 75 years. Also,
from 1950 to 1975 the literacy rate of the country gone up from 18
percentage to 74 percentage. But compared to our neighbor Asian
countries we fallen behind social economic indicators and per capita
income. Another important issue of the country is unemployment, social
inequality and untouchability. The literacy rate of the country jumped
from 18.3 to 74 percentage in the 1947-2021. There is a need for joint
effort created by central and state government. They also concentrate
only essential things and do them well. It includes a. security b. national
defence c. effective delivery of justice d. rule of law e. protection of the
environment f. Building good infrastructure g. social protection h. basic
education i. basic education. Water supply and sanitation
1.4.3 India’s HDI Index Range in Last Few Decades:
Figure 1.6: India’s HDI Index Range in Last Few Decades
Source: IMF DATA
11
Entrepreneurial Dynamism in India
1.5 Conclusion:
India will require a protracted economic boom with sustained high levels
of growth to lift millions out of poverty if it is to become developed in
the next 25 years. Remember that China established itself as a global
manufacturing hub by clocking double-digit real GDP growth for almost
three decades. The results were astounding; according to the World
Bank, China's number of poor people has decreased by about 800 million
over the past 40 years.
China actually played a major role in the global decline in the number of
people who live in extreme poverty, making up approximately three-
quarters (75%) of the total. India hopes to accomplish something similar
with its "Make in India" initiative "program.
Similar to China, it will require an economy on steroids, with potential
double-digit growth over the following 25 years. "Over the next 25 to 30
years, the Indian economy will expand four to five times in absolute
terms.
The difficulty is to also experience rapid per-capita growth. India will
need nominal double-digit growth for that "says Mahindra Group Chief
Economist Sachchidanand Shukla. However, India needs to implement
new reforms in order for that to happen. Manufacturing is currently
hampered by antiquated labour laws, slow land acquisition, and project
approval slowdowns. India still faces enormous obstacles on its path to
becoming a developed nation.
For instance, controlling rapid urbanization continues to be a difficult
task. Urban areas are the driving forces behind economic expansion. In
India, there has been a significant urban migration. According to Niti
Aayog, India's urban population increased from 109 million in 1970 to
460 million in 2018. And finally, India needs to make a complete
overhaul of its crumbling basic education infrastructure.
The learning process more effective of children in the government's
primary schools are appallingly inadequate, according to numerous
studies. India wouldn't be able to maintain its tryst with a demographic
dividend if its workforce was undereducated and unskilled.
12
India "Developed" Country by the year 2047! Study on…
Through programs like the New Education Policy, Skill India, and
Digital India, the Indian government has implemented a number of
initiatives to modernize the educational system and equip India's youth
with the necessary skills.
India needs to continue reforming if it wants to escape the "middle-
income trap." "—a term created to describe low-income nations
incapable of rising to higher per capita income levels. To escape the
"middle-income trap," many Middle Eastern and Latin American nations
struggled "Brazil and Mexico, among others, for many years. The Indian
administration must prevent India from making the same mistake.
1.6 References:
1. Capelli, C., & Vaggi, G. (2016). Why gross national disposable
income should replace gross national income. Development and
Change, 47(2), 223-239.
2. Colmenares, A., Yan, X., & Wang, W. (2021). Determinants in the
forecast of the gross national income of China and India from 1952
to 2015. Journal of Management Science and Engineering, 6(3),
268-294.
3. Farida, Y., Nurfadila, M. R., & Yuliati, D. (2022). Identifying
Significant Factors Affecting the Human Development Index in East
Java Using Ordinal Logistic Regression Model. JTAM (Jurnal
Teoridan Aplikasi Matematika), 6(3), 476-487.
4. Herdika, R., Handoyo, R. D., Hudang, A. K., & Haryanto, T. (2022).
Official Development Assistance Effect on Infant Mortality and
Human Development Index: Asia Evidence. JDE (Journal of
Developing Economies), 7(1), 180-197.
5. Joshi, R. (2022, August 18). Mint Explainer: Can India become a
‘developed’ country by 2047? Livemint.com. HT Media Limited.
Retrieved August 24, 2022, from
https://www.livemint.com/opinion/online-views/can-india-become-
a-developed-country-by-2047-11660812773790.html
6. Listiyani, N., Zulfikar, R., Jaelani, A., &Susanto, D. (2022). The
Years of Schooling Contribution as Factors That Most Considered
In Increasing Human Development Index. International Journal of
Educational Research & Social Sciences, 3(4), 1599-1606.
13
Entrepreneurial Dynamism in India
7. Masduki, U., Rindayati, W., & Mulatsih, S. (2022). How can quality
regional spending reduce poverty and improve human development
index? Journal of Asian Economics, 82, 101515.
8. Nainggolan, L. E., Lie, D., Siregar, R. T., & Nainggolan, N. T.
(2022). RELATIONSHIP BETWEEN HUMAN DEVELOPMENT
INDEX AND ECONOMIC GROWTH IN INDONESIA USING
SIMULTANEOUS MODEL. Journal of Positive School
Psychology, 695-706.
9. Nurvita, D., Rohima, S., Bashir, A., & Mardalena, M. (2022). The
Role of Public Spending on Education, Health, and Economic
Growth toward Human Development Index in the Local
Economy. SRIWIJAYA INTERNATIONAL JOURNAL OF
DYNAMIC ECONOMICS AND BUSINESS, 6(2), 197-210.
14
