Source: Divya Bhaskar (Gujarati), Apr 15, 2024.

Source: Divya Bhaskar, Gujarati

During the last two weeks, we have discussed the importance of individual participation and the quest to be the best in the world in what we do.  Now, I want us to imagine what

the year 2050 would mean to the Indian economy and you!  Before we do that, let’s understand the principles.

  1. Rule of 72 and compounding:  Unfortunately, most of us don’t use compounding after we learn in school.  Let me put things in perspective.  If you are growing your investment or economy at 8%, dividing 72 by the growth percentage (8% in this case) gives us the number of years it takes to double the investment (9 years to double at 8%).  So, if you can generate 12% (rough the returns by index over the past few years), your investment can double in 6 years, become four times (4x) in 12 years, 8x in 18 years and 16x in 24 years!
  2. Economic growth – using the compounding model: If India’s economy continues to grow at 7.2%, it can double in 10 years, become 4x in 20 years and 8x in 30 years! Assuming (even theoretically) that we grow the economy at anywhere between 7 to 9% every year (on average), it will become 5.8 times to 9.4 times, respectively, compared to what it is today at the end of 25 years, in the year 2050!  Therefore, assuming the size of the economy is 3.4 trillion today if we grow between 7 and 9%, we will end up with between 20 trillion and 32 trillion in the year 2050.

While the numbers provide just a rough perspective, if we continue to grow faster than most of the bigger economies ahead of us, we will end up crossing them over in the journey at some point in time.  Remember, as highlighted earlier, we are in the top 5 global economies by size but below rank 120 if we consider per capita GDP (this is our biggest area of opportunity).  Therefore, we need quantity (total economy to grow) and quality (each individual’s contribution to GDP) to grow!

Why is everyone excited about the economic prospects?

Over the last decade, several major enablers of economic growth have been happening – from demographics to the building blocks that RBI has identified (agriculture, manufacturing, demography, digitisation and innovation – highlighted by RBI).  If we study demographics, between 2018 and 2055, India will enjoy the advantage of a young population that will continue to grow during these years, something that is not going to happen in the top 4 economies ahead of us – a clear advantage provided we are ready to leverage it. 

If, through new education policy and other ideas, we can empower the population to deliver best-in-class goods and services, the economy could grow faster than 7% (the average growth over the past 10 years!). In other words, there is a strong logic to calling the upcoming decades the decade of India’s young population if we are ready to grab it and make Amrit Kaal a reality!  

It is a double-edged sword.

While we have an advantage in terms of the working-age population that each of the top 4 economies ahead of us doesn’t have, we must train our young people to do quality work. We need to leap-frog technology by digitization, build world-class infrastructure and increase all the six enablers across India, including rural regions. We also need to build technology for space and drive away poverty. With the above calculations and support from each young Indian, all the numbers are pointing to disproportionate growth ahead! 

Are you ready to join the journey and also enjoy it?