6% Growth Rate Not Enough For India To Rise Above Lower Middle Economy: Raghuram Rajan

New Delhi, Dec 18 (KNN) India will remain a lower middle economy if the growth rate continues to be 6 per cent annually without any rise in the population by 2047, said former Reserve Bank of India (RBI) Governor, Raghuram Rajan

He noted that the Indian economy will remain a lower middle one by 2047 (Amrit Kaal) and would reach the end of the demographic dividend by then. 

Addressing an event in Hyderabad, the former RBI official said, “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,” reported PTI. 

The economist stated that GDP growth in India for the last two quarters remained around 7.5 per cent and ‘if one looks at the labour force participation, it is very low and when it comes to female participation, it is the lowest in the G20’. 

“India's growth potential is today about 6 per cent a year, GDP growth. If you do the math, at 6 per cent a year, you double every 12 years and therefore in 24 years, we'll be four times our per capita income. Today, the per capita income in India, as you know, is just a little below USD 2,500 per person. Multiply by four, we get USD 10,000 per person…So if you do the math, at our current rate of growth, you know, strong as it is highest in the G20, we don't get rich but we stay lower middle income till 2047,” Rajan added. 

Certain southern states are growing in terms of population below reproduction rate, which is weakening growth. 

He noted that if the economy doesn’t grow faster, the country will grow old before it grows rich. Therefore, he stated, that the current pace of growth is insufficient to give employment to all individuals entering the labour force. 

(KNN Bureau)