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India can emerge as the worlds second largest economy in the year 2039, bigger than the US, if its GDP continues to grow at the rate of eight-nine per cent, says a senior economist.
Former senior advisor and a Director at The World Bank, Harinder Kohli said Indias average per capita income would jump 22 times from $940 two years to $22,000 in 30 years from now, in that scenario. "Indias footprint in global economy will go to more than 17 per cent in 2039 from less than two per cent in 2007".
But he underlined that it can become a reality if the current economic growth momentum is sustained in the next three decades. "It (Indias becoming the worlds second largest economy and related indicators) could happen if things go well. That if all goes well". Kohli warned against India getting caught in the "middle income trap" similar to the experience of Mexico and Brazil.
This trap was explained as one when countries start stagnating after reaching middle income levels and dont grow to advanced country levels. Countries getting into such trap are unable to compete with low income, low wage economies in manufacturing exports and also unable to compete with advanced economies in high skill innovations.
At a Confederation of Indian Industry-organised session on "India 2039 An Affluent Society in One Generation" authored by him, here last evening, he said when countries reach middle income group, they need to do a lot of adjustments, required a very different governance, education system, human resource needs and competitiveness, among others.
At that stage, India needs to improve the quality of its workforce and address issues such as inequality in terms of per capita income between different States, and start working on those matters now itself as it takes a long-time to produce results. In addition, he argued that sheer volume of energy required, is not going to be available to it, reliably.
So, it has to tap hydro, nuclear and other renewable energy sources in a big way. And also, India has to understand that it cannot do well economically, if its neighbourhood is not friendly. Failed states around it is not in Indias interest, Kohli, who is currently President and CEO of Centennial Group, said.
"Its in Indias urgent self-interest to export prosperity to neighbourhood", added Kohli, who had served in the World Bank from 1977 to 1998. He also said that the Indian political leadership now realises that "we cannot be rich in poor neighbourhood". In this regard, he pointed out that China is helping out Vietnam, Laos, Cambodia and Burma because their stability is in Beijings own interest.