India can Be Second Largest Economy In 30 Years

India can emerge as the worlds second largest economy in the year 2039

, ahead of the United States, if its GDP continues to grow at the rate of 8 percent to 9 percent, says a former senior adviser and director at The World Bank, Harinder Kohli.

If current rates are maintained, Indias average per capita income would jump 22 times from US$940 two years ago to US$22,000 30 years from now.

Indias footprint in global economy will go to more than 17 percent in 2039 from less than 2 percent in 2007, said Kohli. The former adviser warned against India getting caught in the middle income trap experienced in Mexico and Brazil. The middle income trap occurs when countries start stagnating after reaching middle income levels and dont grow to advanced country levels. Countries getting caught in such trap are unable to compete with low income, low wage economies in manufacturing exports and also are unable to compete with advanced economies in high skill innovations.

Kohli, who is currently president and CEO of Centennial Group, chaired a Confederation of Indian Industry session, titled India 2039 An Affluent Society in One Generation.

During the conference, he said that when countries reach middle income groups, they need to do a lot of adjustments, requiring a very different governance, education system, human resource needs and competitiveness, among other things.

At that stage, India needs to improve the quality of its workforce and address issues such as inequality in terms of per capita income between different States, and start working on those matters now itself as it takes a long-time to produce results. he said.

In addition, he argued that the sheer volume of energy required to do it reliably is not going to be available. India will instead have to rely on hydro, nuclear, and other renewable energy sources in a big way. He also pointed out that India has to understand that it cannot do well economically if its neighborhood is not friendly. Failed states on Indias borders are not in Indias interest.

Its in Indias urgent self-interest to export prosperity to the neighborhood, added Kohli, who had served in the World Bank from 1977 to 1998. He also said that the Indian political leadership now realizes that, we cannot be rich in a poor neighborhood.

In this regard, he pointed out that China is helping out Vietnam, Laos, Cambodia, and Burma because their stability is in Beijings own interest.

by: Dezan Shira & Associates

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