India needs 8-9% growth to become Viksit Bharat by 2047: Raghuram Rajan

India Today

2 days ago

'I've been shouting from the rooftops forever—if we want to become a Viksit Desh by 2047, we need more like 8, 8.5 to 9% growth, because we are still a relatively poor nation,' former RBI Governor and renowned economist Raghuram Rajan said in an interview with India Today TV Consulting Editor Rajdeep Sardesai.His remarks come even as India posts strong GDP figures in a turbulent global environment. The economy expanded 7.4% in the fourth quarter of FY25 and clocked 6.5% growth for the full year—figures that are well above what most major economies are managing.advertisementRajan acknowledged that India's current growth of 6.5% is 'a very creditable growth rate,' especially in light of postponed government spending during the election cycle and temporary statistical distortions. But he stressed that now is not the time to get comfortable.
'This could be India's moment, but we have to seize it,' Rajan said. He argued that India must act decisively to sustain higher growth—by unlocking investment, expanding the consumption base, and ensuring businesses, both domestic and foreign, have the confidence to make long-term bets on the Indian economy.'SOME SLOWING IS ON THE CARDS'The biggest drag on momentum, according to Rajan, could be rising global uncertainty. He pointed in particular to Donald Trump's potential return and the unpredictability surrounding tariffs.'Some slowing is on the cards,' he said. 'We came into this year with an extraordinary performance. But with tariff uncertainty in the US and across the world, that momentum is off the table now. If you're a businessperson today, where do you invest?'advertisementDespite this, Rajan noted a few emerging positives such as a favourable monsoon outlook, which could lift agricultural output, and the long-awaited signs of a rural demand revival.'That's a positive,' he said, 'because it also reduces inequality.'CROSSING JAPAN ISN'T THE FULL STORYWhen asked about recent IMF projections that India's nominal GDP would surpass Japan's to become the fourth-largest economy, Rajan welcomed the milestone but urged a more grounded perspective.'Let's not minimise the fact that we are crossing these countries, we will cross Germany at some point over the next few years. Maybe 1 or 2 years,' he said.But he warned against equating overall GDP rankings with true economic progress.'Exchange rate fluctuations also have an effect—the Japanese Yen has strengthened. We should take this as evidence that we are on a good path, but not necessarily get overly enthusiastic about it. We are much poorer than these countries and what matters to the average citizen is how wealthy they are and not aggregate GDP because we are the most populous country in the world. So overall GDP is going to be quite high even if the average citizen is quite poor.'Rajan highlighted that India must now focus on lifting incomes and creating broad-based prosperity, not just chasing headline economic rankings.advertisement'We need to think about how we look over the next 5-10-15 years,' Rajan said. 'Certainly the manufacturing-led growth path is coming under some kind of cloud. We need to work very hard on skilling our population, we need to work very hard on creating new jobs in services, [and] need to work very hard on creating new sources of exports.'For Rajan, India's 'moment' is here, but needs sustained policy action. The goal of becoming a developed nation by 2047, he believes, is achievable, but only with growth that lifts all boats.Must Watch