'India needs to grow by...': Raghuram Rajan on what it'll take to be a developed economy

Former RBI governor Raghuram Rajan said if India wanted to become a developed country by 2047, it needed to achieve an annual growth rate of more than seven per cent.

"At a growth rate of seven per cent, India's per capita will grow from the current $2,400 to $10,000 in 2047, which will put the country in the low middle-income bracket," he said at his book launch in Kolkata. 

Rajan has co-authored the book, 'Breaking the Mould: Reimagining India's Economic Future', with economist Rohit Lamba.

Rajan said India needed to focus more on education and healthcare to become a developed economy by 2047, highlighting the fact that India has maintained an average growth rate of six per cent over the past 25 years, which is no easy feat for any country.

Rajan emphasised the need for governance reforms, as well as a focus on education and healthcare, to build a strong foundation. He stressed the importance of determining the future direction for India's growth, especially considering that the demographic dividend the country currently enjoys will diminish after 2050.

He also emphasised the need for balanced growth across all sections of society, as consumption growth is currently only strong among the upper income levels.

Rajan and Lamba both stressed on the importance of India producing high-value products and conducting research to support entrepreneurs in capturing the high-end of the value creation trajectory. The former RBI governor had last month said India will still be a lower middle economy if the potential growth rate continues to be 6 per cent annually without any increase in population by 2047. “If the country does not grow faster, it will grow older (demographically) before it gets richer, which means there is the burden of an aging population to deal with also at that point,” he had noted then.