To become a developed economy by 2047, four reforms for India |
India’s ambition to become a $7-10 trillion economy over the next decade and a developed economy by 2047 is now central to the economic agenda. The key question is how to finance this growth in a durable, stable and efficient way.
The debate is often framed as a question of how much capital India can mobilise. That framing is incomplete. The central risk in India’s growth strategy is dependence on short-term capital combined with persistent execution frictions. Four priorities stand out.
First, rebuild long-term domestic savings. This is the binding constraint. India’s growth model ultimately rests on domestic savings. Government balance sheets cannot expand indefinitely, banks are structurally unsuited to long-tenor financing, and foreign capital is volatile. Household savings remain the largest component of India’s savings pool, but recent trends are worrying. Net household financial savings reached a multi-decade low of around 5.3 per cent of GDP in FY2023, while household debt has risen to over 40 per........