India’s trajectory broadly positive, but it may not be mathematically possible for the country to become a developed economy by 2047: Ruchir Sharma

While speaking at the BT India@100 conference in New Delhi on Tuesday (August 20), Ruchir Sharma advised measures like “micro economic reforms” such as reducing the regulatory and compliance burden on businesses as well as controlling investigative agencies to improve private sector business confidence that could boost the economy.

“India’s trajectory is broadly positive. But there is no way any math would support us becoming a developed economy by 2047,” Sharma said.

Addressing a session on ‘India@100: The State of Capitalism in India’, the Rockefeller International chairman said, “Growing at 6 percent a year, which is what the growth rate seems to be as there does not seem any reform on the anvil to boost growth to 10 percent, we will struggle to be a middle income country by 2047.”

“For us to become a developed country by 2047, we will have to grow at 10-12 percent real GDP per year, or even to be a middle income country. Our per capita income today is $3,000...you do the math...,” Sharma added, while agreeing that 10-12 percent GDP growth on an annual basis is not possible in the current economic situation.

Ruchir Sharma also pointed out that China benefitted enormously from globalisation but they built a huge export system and also carried out ruthless capitalism and was able to grow at a much higher GDP rate, reports Business Today.

Meanwhile, on a question on the Indian stock markets, Ruchir Sharma said that the classic models are not working for the country as of now.

“The domestic flow of money or the financialisation trend that we are seeing has taken a momentum of its own," Sharma said.

"India has been the most expensive stock market in the world for a while. It is the one market in the world which is more expensive than the US in terms of valuations despite the US market being at record highs. This is a market which is functioning on its own dynamics. The good thing is that it is so far broadly supported by fundamentals,” he added.

Sharma also underlined that the Modi-led NDA government in the last 10 years has been very good in its macroeconomic management and has managed to bring down inflation and also not go overboard on stimulus measures during the pandemic.

However, the head of Rockefeller Capital Management's international business said that he disagreed with some of the steps taken by the Indian government such as demonetisation and many issues during the roll out of the goods and services tax (GST).

Sharma also pointed out that there has been little success in privatisation over the last few years and doing business in India for foreigners continues to be fraught with difficulties, Business Today reported.