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India’s ambition to become a developed country by 2047 will require an unprecedented and sustained acceleration in income growth, a challenge the country has historically struggled to meet, former Reserve Bank of India Governor Duvvuri Subbarao said.
Speaking in an interview with CNBC-TV18 's, Subbarao said India’s per capita income of about $2,700 would need to rise nearly eightfold over the next 22 years to reach developed-country benchmarks of roughly $21,700. That would require annual economic growth of around 8% or higher over a prolonged period, a feat India has rarely achieved.
“Since economic reforms began, India has clocked eight-plus percent growth only a few times, and never for more than two consecutive years,” Subbarao said, describing the 2047 target as difficult but not impossible.
While acknowledging that India’s recent macroeconomic performance has been relatively strong—with growth above 7%, low inflation and a manageable current account deficit—Subbarao cautioned against assuming the economy has shifted to a structurally higher growth path. “There is cause for cheer, but not for celebration,” he said.
He pointed to weak private investment as a key constraint, noting that capital expenditure by the private sector remains subdued despite favourable macro conditions. Job creation and household income growth are also lagging GDP expansion, raising concerns about productivity and inequality.
“The economy is growing, but jobs, productivity and household incomes are not keeping pace,” Subbarao said, warning that growth which does not translate into broad-based prosperity may prove unsustainable.
Subbarao stressed that even if India falls short of the headline income targets associated with developed-country status, the distribution of growth gains will matter more. “A developed country is not just about numbers. It is about whether the benefits of growth are widely shared,” he said.
He also highlighted the role of banking sector reform in supporting long-term growth, arguing that persistent structural issues in public sector banks continue to limit credit efficiency. While proposals such as bringing state-owned banks under the Companies Act or strengthening boards may deliver incremental improvements, Subbarao said they would not transform the sector as long as the government remains the dominant owner.
“The problem is not just laws or regulation. It is the culture and incentives within public sector banking,” he said, adding that a credible roadmap to reduce government ownership would be critical to restoring confidence and improving performance.
Without stronger private investment, deeper banking reform and meaningful job creation, Subbarao warned that India risks falling short of the sustained high growth needed to meet its long-term development ambitions.
Speaking in an interview with CNBC-TV18 's, Subbarao said India’s per capita income of about $2,700 would need to rise nearly eightfold over the next 22 years to reach developed-country benchmarks of roughly $21,700. That would require annual economic growth of around 8% or higher over a prolonged period, a feat India has rarely achieved.
“Since economic reforms began, India has clocked eight-plus percent growth only a few times, and never for more than two consecutive years,” Subbarao said, describing the 2047 target as difficult but not impossible.
While acknowledging that India’s recent macroeconomic performance has been relatively strong—with growth above 7%, low inflation and a manageable current account deficit—Subbarao cautioned against assuming the economy has shifted to a structurally higher growth path. “There is cause for cheer, but not for celebration,” he said.
He pointed to weak private investment as a key constraint, noting that capital expenditure by the private sector remains subdued despite favourable macro conditions. Job creation and household income growth are also lagging GDP expansion, raising concerns about productivity and inequality.
“The economy is growing, but jobs, productivity and household incomes are not keeping pace,” Subbarao said, warning that growth which does not translate into broad-based prosperity may prove unsustainable.
Subbarao stressed that even if India falls short of the headline income targets associated with developed-country status, the distribution of growth gains will matter more. “A developed country is not just about numbers. It is about whether the benefits of growth are widely shared,” he said.
He also highlighted the role of banking sector reform in supporting long-term growth, arguing that persistent structural issues in public sector banks continue to limit credit efficiency. While proposals such as bringing state-owned banks under the Companies Act or strengthening boards may deliver incremental improvements, Subbarao said they would not transform the sector as long as the government remains the dominant owner.
“The problem is not just laws or regulation. It is the culture and incentives within public sector banking,” he said, adding that a credible roadmap to reduce government ownership would be critical to restoring confidence and improving performance.
Without stronger private investment, deeper banking reform and meaningful job creation, Subbarao warned that India risks falling short of the sustained high growth needed to meet its long-term development ambitions.
