India@2047

The Niti Aayog vision document argues that growing the Indian economy to a staggering $30 trillion by 2047 is a precondition for national security. EPISODE #150

Dear Reader,

A very Happy Monday to you.

Last week, the Niti Aayog, the erstwhile Planning Commission and now the think tank for the union government, shared a sneak preview of its vision document for India@2047 with select media. Understandably, the big headline next day was the target of $30 trillion the institution has set for the Indian economy in 2047.

I would argue that the big news is the audacious intent that is implicit in the document. Essentially, the vision document is making the case for a pivot that was unthinkable even a decade ago.

It is about how India will have to reinvent itself to align itself to an unprecedented development trajectory to secure its national interests. This week I explore this theme. Do read and share your feeback.

A big shoutout to Surendra, Gautam, Balesh, Premasundaran, Vandana and Ranjini for your informed responses, kind appreciation and amplification of last week’s column. Once again, grateful for the conversation initiated by all you readers. Gratitude also to all those who responded on Twitter and Linkedin. 

The cover photo is taken by Darshak Pandya and sourced from Pexels.

Unfortunately, Twitter has disabled amplification of Substack links—perils of social media monopolies operating in a walled garden framework. I would be grateful therefore if you could spread the word. Nothing to beat the word of mouth.

Reader participation and amplification is key to growing this newsletter community. And, many thanks to readers who hit the like button😊.

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Photo by Darshak Pandya

The New Idea of India

Little over a week ago, the Niti Aayog, the erstwhile Planning Commission and presently the think tank of the Union government, shared a sneak peak on its vision document for India@2047.

Undoubtedly the big headline was that India had set itself an audacious target of growing its economy into a $30 trillion economy in the next 25 years. An ambitious ask indeed. And the obvious inference is that its development trajectory is poised to undergo an unprecedented pivot.

More important (to me) is the implicit statement of resolve and intent underlying this tall order: That India needs to become strong, both militarily and diplomatically. And, this is possible only if India is a strong economy.

In a transactional world, might does carry weight. Look at the way the United States and China, the two largest economies in the world, use (or as some would say misuse) their clout on the global stage. For them “fair is foul, and foul is fair” when it comes to their interests and there are few who would dare them.

In India’s case I presume it is not about acquiring bullying rights.

Instead it is to build a line of defence that is sufficient to repel any country bearing bad intentions.

Cusp of Change

The vision document from Niti Aayog has been in preparation for the last year and more. The union government set up 10 groups of secretaries to ready sectoral visions for business, finance, social security, commerce and trade.

In addition, there are vision documents for states. In some instances, like Gujarat and Andhra Pradesh, the Niti Aayog is helping with the vision statement. On the other hand, states like Tamil Nadu, Puducherry and so on are authoring their own version.

Niti Aayog will pull all these strands together to come up with the vision document: India@2047. As already announced the prime minister will release this document in January, after which it will be opened up for discussions with all stakeholders before a formal roll out.

The above graphic captures the staggering forecast shared by Niti Aayog in its teaser. The economic growth is dramatic—doubling by 2030, more than doubling in the next decade, before scaling the Indian economy to $30 trillion by 2047.

With population expected to stabilise around 1.5 billion, this would translate into an equally dramatic growth in per capita income. As the graphic below shows per capita income grows seven fold in the same period.

The Strategy

Underlying this desire to grow the economy so rapidly is a strategic intent. A belief that a strong economy automatically translates into a country that is strong, both militarily and diplomatically.

Not just modern wars, but the history of battles is replete with examples of vulnerable economies causing a defeat—exactly why countries bomb the infrastructure of rivals out of existence. Worse, in the context of the ongoing regional wars, it is apparent that there no short battles. It is a steady battle of attrition lasting for years, wherein the country with the weaker economy finally caves.

Given the recent turn in geopolitics, de-risking is a precondition for ensuring national security. The face off between the United States and China over the manufacture of silicon chips and mineral security are sufficient pointers of the new threats.

At the same time there is a tacit recognition that no single country will acquire all capabilities—implying that there will be some level of dependence on others. This is the genesis of the idea of “friend-shoring” of supply chains.

Hence, while India has to grow its economy numerically, it will also have to strengthen its foundations. An economy that will be more diversified with a strong industrial base—including defence production capability—ensure energy security, especially through the diversification of the energy mix with lesser emphasis on hydrocarbons.

India will also have to ensure that neither an individual nor a region in the country is left behind. At present, regional growth is skewed with the eastern regions lagging the western states. Social and regional stability will have to be guaranteed to ensure sustainable growth.

Finally, India will need a strong, vast infrastructure that connects the country both internally and externally.

The good news is that several of these building blocks like developing infrastructure, including rural connectivity, on mission mode, an industrial policy defined by PLIs to localise production and creation of defence clusters have already been seeded.

All these initiatives are key to de-risk India and not make the country self-reliant—as is mistakenly argued in some quarters.

Mindset Reset

Unlike some other developed nations, India does not have the luxury of calibrating its transition.

It spent the first seven decades struggling to address basics like universalising education, banking, electricity, cooking gas and drinking water. The good news is that most of these legacy deficits have been overcome thanks to the mission mode approach in the last decade.

India cannot wait. It has to launch itself immediately on the next phase of growth. Especially, given the turn in geopolitics. The world is deeply divided. The tail wind of global trade that helped transform the Chinese economy into a juggernaut in the two decades after the turn of the Millennium is missing.

The biggest challenge India is facing is its mindset.

Breaking out of a mould that has evolved over seven decades is not going to be easy. Its bureaucracy is tuned to addressing development challenges like poverty; its business is still to break out of the “Licence Raj” and crony capitalism overhang; citizens are still suspicious of the state, which for long has plundered public finances for political gain.

The ongoing round of state elections are a perfect example. Politicians are vying with each other to lure the electorate on freebies that they know will bankrupt the state exchequer.

To cite an example, the recent elections in Karnataka saw the Congress offer a range of freebies. They eventually won the election and got down to delivering their electoral promises. The fiscal math was staggering: While the total projected expenditure for this financial year is Rs2.50 lakh crore, the cost of the poll guarantees is Rs52,000 crore. You can’t have the cake and eat it too.

In the final analysis it is clear that India is on the right track with its vision statement. Pulling it off will not be easy though. It is predicated on the extent of buy-in by various stakeholders, whether they be the government, bureaucracy, India Inc and of course citizens.

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Recommended Viewing/Reading

Sharing the latest post of Capital Calculus on StratNews Global.

For the last few years China has been in the news for all the wrong reasons.

One point of concern has been its rapidly slowing economy. From the heady days of near double-digit growth, it will be lucky to top 5% growth this year. What happened? Worse, some quarters argue that the Chinese economy is poised for a meltdown.

To glean the facts we spoke to Shehzad Qazi, one of the most objective voices on China. Shehzad is the Managing Director, China Beige Book—which has the largest privately owned database on the Chinese economy.

In the conversation Shehzad dismissed claims of a meltdown. Instead he argues that the Chinese economy is transiting to an era of a much slower growth. Its future rests on the country’s ability to pull off its gamble to shift from a capital driven growth to an economy that is powered by consumption.

Sharing the link below. Do watch and share your thoughts.

Till we meet again next week, stay safe.