India’s Growth Trajectory Faces Hurdles in Achieving Developed Nation Status by 2047

India’s economy likely grew at more than 7 per cent in the last quarter, maintaining a pace that outstrips most major global economies. However, economists note that this growth rate may still be insufficient to fulfill Prime Minister Narendra Modi’s vision of transforming India into a developed nation by 2047, the centenary year of its independence.

According to Ashok Lahiri, a senior official at the government-run think-tank NITI Aayog, achieving this status requires the world’s sixth-largest economy to grow at an average of 9.25 per cent annually for 21 years. The ambition, branded as 'Viksit Bharat', forms a central pillar of Modi’s third term. Yet, historical data indicates that the economy has grown at or above 9.25 per cent only three times over the past fifty years—in 1975, 1988, and 2021—while averaging 6.3 per cent between 2000 and 2024.

Alexandra Hermann Prasad, a London-based economist with Oxford Economics, stated that reaching the target demands an exceptionally strong and sustained acceleration in growth, which becomes increasingly difficult as the economy expands and its base grows larger. Recent data indicates that the economy expanded 7.3 per cent last quarter from a year ago, slowing from 7.8 per cent in the previous three months.

Economists warn that sustained growth below 8 per cent could leave India vulnerable to the middle-income trap, where rising wages erode low-cost competitive advantages before productivity and skill levels improve adequately. The gap to high-income status remains substantial: India’s per-capita income stood at $2,813 in 2025 and must rise more than sixfold to approximately $18,000 by 2047.

External vulnerabilities also persist. Lavanya Venkateswaran, an economist at Oversea-Chinese Banking Corp, pointed to current-account and budget gaps alongside a heavy reliance on volatile capital inflows as key risks to the external balance. Investor sentiment has experienced pressure, with the Indian rupee ranking as Asia's worst-performing currency this year, and India replacing Indonesia as Asia's least-preferred stock market in an August survey of fund managers by Bank of America Corp.

To accelerate economic momentum, economists emphasize the need to expand manufacturing, boost high-tech exports, encourage private investment, and reduce reliance on imported energy. However, the manufacturing sector has remained stagnant at roughly 16 per cent to 17 per cent of gross domestic product for over a decade, falling short of the government’s 25 per cent target. India currently accounts for less than 2 per cent of global goods exports, compared to China's more than 14 per cent.

Addressing employment and domestic savings is equally critical. A recent NITI Aayog report based on 2021 surveys highlighted that nearly 87 million Indians aged 15 to 29 were neither working nor engaged in education or training. A shortage of quality jobs has pushed nearly 60 per cent of the workforce into self-employment, primarily within the lower-paying agricultural sector.

Shumita Deveshwar, chief economist at GlobalData.TS Lombard, noted that despite macroeconomic stability and a reform-oriented government, the investment cycle has remained at nascent stages, and net foreign direct investment remains close to zero. Without robust private investment and faster job creation, sustaining growth rates above 6 per cent remains a challenge, let alone the 8 per cent-plus expansion required for developed-nation status.

"India’s strong headline growth numbers mask critical structural hurdles, particularly in manufacturing output, private sector investment, and job creation for a young workforce. For the startup ecosystem and the broader business landscape, achieving long-term economic transformation requires moving beyond consumption-driven momentum to deep-rooted capital formation, skill development, and sustainable domestic savings." — Dr. Shishir Gupta, Founder & CEO, StartupLanes