Informist, Tuesday, Apr 23, 2024

--RBI paper: Data shows econ activity moderated in Mar from Feb

--RBI paper: Data shows Jan-Mar GDP may grow 7.3%

--RBI paper: Indian conditions shaping up for extended high GDP growth

--RBI paper: Outlook for global trade turning positive

NEW DELHI – The Indian economy must grow at 8-10% per annum over the next 10 years, if the country is to achieve its developmental aspirations over the next three decades, and also reap the demographic dividend, a Reserve Bank of India staff paper said today.

India has been accruing the demographic dividend since 2018, and it is expected to last till 2055, the paper, titled 'State of the Economy' in the central bank's bulletin for April, said. The paper, authored by RBI officials including Deputy Governor Michael Patra, said views expressed therein do not necessarily reflect those of the central bank.

"In India, conditions are shaping up for an extension of the trend upshift that took the average real GDP growth above 8 per cent during 2021-24," the central bank staff said.

"For India to harness its favourable demographics and achieve the escape velocity required to breach the low middle income barrier, the developmental strategy over the next few decades must centre around extracting the maximum possible contribution of its young and rising labour force to the growth of GVA (gross value added)," the paper said.

"With the working age population set to expand at the rate of about 9.7 million per annum during 2021-31 and 4.2 million per annum during 2031-41, the cutting edge of the growth strategy will be provided by a focus on labour quality," the paper said.

The government aims to make India a developed economy by 2047, the year when the country celebrates a century of Independence. While there is no particular definition of a developed nation, the World Bank tags countries as low-, lower middle-, upper middle-, and high-income based on their per capita incomes.

According to its classification, a country's per capita nominal GDP must be more than $21,664 to become a high-income country. According to the latest available data from the World Bank, India's real GDP per capita was $2,090 in 2022, while the nominal per capita GDP was $2,411, making it a lower-middle income country.

India's GDP growth is the fastest among major economies right now. The economy is estimated to have grown 7.6% in 2023-24, as per the government's second advance estimate, and the RBI forecasts it to expand by 7.0% in the current year.

The GDP has grown at 8% or higher for the first three quarters of 2023-24, implying a growth of 5.9% in Jan-Mar, data for which will be released at the end of May. According to the RBI's economic activity index, economic activity remained resilient in Jan-Mar, even though available data indicates some moderation in March compared to the previous month. The GDP likely grew by 7.3% in Jan-Mar, the paper said.

Globally, the growth momentum has sustained in Jan-Mar and the outlook for global trade is turning positive, the paper said. However, broader risks from logistics and transport disruptions remain.

"The prospects for trade in commercial services are set to maintain strength as seen in 2023 and offset some of the risk factors associated with the merchandise trade outlook," the RBI staff said. End

Reported by Shubham Rana

Edited by Aditya Sakorkar

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