India's Path to Largest Economy Runs Through Demographics & Reforms: Michael Patra
RBI deputy governor Michael Patra pointed to the convergence of several favourable forces that could provide significant tailwinds to the country’s economic journey.
Mumbai: India's path to becoming world's largest economy runs through demographic dividend and structural reforms, according to RBI deputy governor Michael Patra.
" India is at a critical juncture in its economic journey, with the potential to emerge as the world’s largest economy in the coming decades, provided it successfully leverages its demographic dividend and addresses structural challenges related to employment, manufacturing, infrastructure and women’s labour force participation," said Patra speaking at Emkay Global Financial Services' institutional investors conference.
"India’s growth trajectory has strengthened significantly following the pandemic. India has averaged 7.7 per cent growth since FY22 and is currently the second-largest contributor to global growth, behind China," Patra said.
"India’s demographic advantage represents one of its biggest opportunities. With a young population and a rising working-age population, the country has a window extending to around 2055 to maximise the benefits of higher incomes, savings and investment. Effectively utilising this demographic dividend will be critical to sustaining higher growth over the coming decades," he said.
“India’s time has come,” he noted, pointing to the convergence of several favourable forces that could provide significant tailwinds to the country’s economic journey.
“India’s economic journey is entering a phase where the scale of its opportunity is matched by the complexity of the global environment. For investors, understanding this transition requires looking beyond near-term cycles and assessing the deeper shifts shaping India’s markets and its place in the global economy," said Nirav Sheth, CEO, Institutional Equities, Emkay Global Financial Services.
Existing long-term projections suggest India could overtake Japan to become the world’s fourth-largest economy and subsequently surpass Germany to become the third-largest, according to Emkay Global.
"However, if India successfully capitalises on its demographic dividend and overcomes its structural challenges, its trajectory could be significantly stronger. Under such a scenario, India could potentially overtake the United States by the mid-2030s and China several years thereafter, emerging as the world’s largest economy."
