By all accounts, India should be the world’s second or third largest economy in 2047 after China and the United States. In 2016 purchasing power parity (PPP) India is #3; in nominal terms #7. If India grows at an average rate of only 6% per year for the next 30 years, it should be the #3 economy in nominal terms and #2 in PPP. India will overtake the U.S. in PPP terms and Japan in nominal terms. Hardly any economist expects the U.S. or Japan to grow faster than 3% per year for the next several decades; the U.S. is currently growing at 1.6% and Japan at 1.1%; India is growing at 7.1%. India is currently the world’s 6th largest manufacturer and #11 in the Global Competitiveness Index (Deloitte, 2016).
India is very competitive in cost and labor skill but behind Germany, Japan and the U.S. on innovation, productivity, and supply chain, and has poor legal and regulatory systems, and physical infrastructure. However, with regulatory and legal reforms, rapid modernization of infrastructure, investment in education, and encouragement of innovation, my expectation is that by 2047 India will climb in competitiveness and become the world’s 3rd or 4th largest manufacturer behind the U.S., China and Germany.
In spite of three decades of growth of the ICT sector in India, the universal Aadhaar system introduced by Congress and the current FinTech expansion of BJP India has not reached its ICT potential. The World Economic Forum’s networked readiness index ranks India at #91 out of 139 countries analyzed which is shameful. World Bank’s Digital Adoption Index shows that only 50% of India’s population is “touched” by digitalization; the DAI is 78% for U.S. and 62% for China. It is my expectation that the Indian software industry will start delivering the goods to the hungry domestic market, truly innovating in products and services, and become the second largest in ICT in the world in 2047 after China.
The third main economic cluster that will propel India is health sector. In pharma, India has a “unique blend of low-cost manufacturing, R&D infrastructure and skilled workforce” (McKinsey, 2017). India has 20% market share in the generic drug market. There is no question that Indian pharma will continue to grow rapidly and will become the source of choice for medicines in much of the world. As healthcare costs in the western world increases with its aging population, and the respective governments start cutting back on benefits, having their health attended to in India, and diagnosis made by Indian doctors via global networks will be the medium of choice for much of the western population. Current forecasts expect medical tourism in India to be a $20 billion industry in 2020. I expect that by 2047 medical tourism in India might well be one of the largest “export” industries.