India could become a $55 trillion economy by 2047 if state and central governments effectively implement policies to increase growth from the current 7-8%, according to IMF Executive Director Krishnamurthy V. Subramanian.

At the launch of his book India @100 at the Indian School of Business, Subramanian noted that reaching a $55 trillion economy by 2047 might seem ambitious, but it’s achievable.

He pointed out that India’s private credit to GDP ratio was 58% in 2020, significantly lower than the 200% seen in advanced economies, though progress in financial inclusion is being made through initiatives like ‘Pradhan Mantri Jan-Dhan Yojana.’

“So, while this may seem ambitious, it is the power of compounding that makes it possible. If we achieve 8% growth, we can indeed become a $55 trillion economy,” said the former chief economic advisor, explaining why he believes India can reach this target by 2047.

Subramanian broke down the math using the “rule of 72.” He pointed out that with a 12% growth rate (8% GDP growth, 5% inflation, and 1% rupee depreciation), the economy will double in size every six years. Right now, it stands at $3.25 trillion. Over the next 24 years, this pattern means it will double four times. By 2047, India could have a $52 trillion economy.

He cited Japan’s growth from $215 billion in 1970 to $5.1 trillion in 1995, a 25-fold increase in 25 years, with GDP per capita rising from $2,100 to $44,000. He emphasised that using government borrowings to create assets is crucial; if spent on subsidies or revenue expenditures, it does not contribute to economic growth.

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