Dr. Arvind Virmani
Member, NITI Aayog

Introduction
— Macro perspective: High Income country mid-21st C
— LMIC(2000)=> UMIC(<2035)=> HIC (>2050)
— India in 2050
— Public welfare: PcGDPppp (150 =>90)
— Poverty: 2019: abs($1.9) <2%, mic($3.2) ~ 20%; =>hic($10)
— Poverty: 2019: abs($1.9) <2%, mic ($3.2) ~ 20%; hic($10)
— Economic size/power: GDP, VIPP (5 => 3)
— India relative to China (Gap closing)
— Conservative proj.: World Catch up-growth experience
— Key means for achieving objective
— Drivers of growth
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Threats & Opportunities
— Opportunity
— Global & Indian demography: Share of working pop
— Supply Chain Diversification (LI manufacturing)
— Threats (=> Opportunity)
— Oil/energy prices: Leader in solar power
— Aggression & Grey war: Defense Industrial complex
— Weakness (=> Opp0rtunity)
— Level of education & job skills: Create Low, med, hi
— Low Female labor force participation: WFH+
— Structural employment trap: Spatial planning;District-
town-ind estate-rural integration(trans, network)
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Key Pillars
1. Sustained, fast, economic growth
— PcGdp: Avg(30 year) = 5.8 % per year (base case)
— GDP = 6.4% given pop gr of ~0.6% per year
2. Equality of opportunity (EoO)
— Women, SC/ST, rural residents
3. Digital revolution/economy
— Virtuous cycle
— Equality of opportunity drives growth
— Fast growth drives Equality of opportunity
— Digital transformation will drive both
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Welfare: Per capita Income
— Accelerated catch-up,
post-pandemic: Reforms
— India’s PcGdp will
increase from,
— 40% of world avg in
2019 to 130% in 2050
(LHS, purple line)
— 1/10th of USA in 2019 to
1/3rd in 2050 (RHS,
green line)
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0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
PcGdp(PPP): India/World & India/USA
PcGpp:Ind/wld PcGpp:Ind/us

Economic Welfare, Size & Power
— India’s PCGDP rank will
improve from 127 to 90
(ln 4, cln 3, 5)
— Living standard/quality
of life=EU of mid-1990s
— GDPpp: India/China 41%
to 80% (ln 6; clmn 5, 8)
— VIPP: India 0.15 => 0.83
(ln5); China 0.56 => 1.34
(ln 9), clmns 7, 9
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1 2 3 4 5 6 7 8 9
1
2 Pcgdp rank Pcgdp rank Gdp VIP Gdp VIP
3
4 India 6700 127 34477 90 9155 56515
5 India/USA 0.11 0.33 0.45 0.15 1.4 0.83
6 India/China 0.42 0.65 0.41 0.27 0.8 0.62
7
8 China 16117 134 52792 59 22567 74036
9 China/USA 0.26 0.51 1.1 0.56 1.9 1.34
10
11 USA 62530 12 103776 14 20525 39375
12 Note: Pcgdp of HICs - Country (Amount, year)
UK(34679,1997), Japan(34615, 1999)
Spain(34798,2000), Australia(35005,1997)
Table:PcGDP, GDP & VIPP
GDP percapita, PPP (const 2017int $) GDP, PPP (const 2017, int US$)
2019 2050 2019 2050

India/China:PcGdp(ppp,$), VIPP
— India’s PcGDP(PPP) is
proj. to increase from
42% to 65% of China’s
(purple line)
— India/China PcGDP in
US$ 0.25 (green line)
— India’s Economic power
(VIPP), is proj. to
increase from 0.27 to
0.62 of China’s (red line)
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0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
India/China: VIP, PcGdp(US$) & PcGdp(ppp)
VIP:Ind/ch PcG$:Ind/Chi PcGpp:Ind/Chi

Sustained, fast growth
— Role of Govt, Private & Social sector (NGOs)
— Government will focus on
— Public good provision & regulation of externalities
— Market environment: Pro-investment, pro-competition
— Welfare transfers, supporting the weakest
— Private sector: Compete, innovate, invest
— Social Sector: Community support of special needs of
disabled (physical) & disadvantaged (mentally)
— Global comparative advantage: Demographics
— Unskilled=>Semi-skilled=>Skilled labor(R&D)
— AI, expert sys: Subst skilled, compl/leverage semi-skilled
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Reforms Undertaken
— India Bankruptcy Code (IBC): Management, bad debt
— Monetary Policy Committee: Flex Inflation targeting
— Constitutional Amendment: GST
— DBT(Aadhar, Jan Dhan acts, DCT-farmers)
— Natural Resource: Oil, coal, mineral, spectrum auction
— Corporate tax: 25%; Supply chain manf 15%
— Govt Monopoly=>Pvt(Coal, Oil; Defense; Space, AE)
— “Strategic Industry” Privatization(CPSEs, PSBs)
— Labor Codes (4<=44/29); Rules (28/31)
— Education Policy(incl Medical): Pvt & frgn entry
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Growth environment: Future
— Competitive market óSustained, fast growth
— Institutional Reform
— Modern, professional regulatory system
— Contract enforcement system
— Criminal-justice system
— Social Reform
— Facilitate Female Labor Force Participation
— Break barriers to occupational mobility (e.g. caste)
— Growth Driver: Supply chain diversification (s10)
— Policy Reform for inclusive growth (s11)
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Supply chain diversification
— Geopolitical Tsunami: Communist challenger
— High Tech decoupling: US/West viz China
— Partial Economic decoupling/deglobalization
— Friend shoring, reliability, credibility
— Two economic blocks(G2), with greater trade within
each block than across blocks
— PRC manf. monopoly [2030: Textiles(47%), EDP+Ofc
(40%), Telecom(39%), Clothing (32%)]
— Supply chain diversification: Just in Time=>Just in case
— Dualistic trade policy: PRC (symmetry), DCs (FTAs),
ROW (classic free trade)
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Equality of Opportunity &
Social Welfare
— Un/under utilized Brain Power (IQ, EQ, SQ)
— Social constraints: Gender, Caste, Religion
— Rural disadvantage: Dis-economy of dispersed pop
— Education & skills: quality differences(Rural)
— Public Health, PH institutions & PH education
— Health services: Quality of information
— Employment/Job opportunity: Market failure
— Social network bias, Information bias; Training capacity
— Public goods Infra, Private provision, PPP; WFH
— Services vs Manufacturing/Industry
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Knowledge economy
— Access to information: Get right information, to
right people, at right time, in the right place
— At all levels of education/skills; low medium, high
— Large externalities; high social returns
— 1) For low income, less educated, low skilled
— Basic education & digital literacy
— Operational knowledge: Ease of living
— Job skills, work knowledge
— Connectivity to Supply chains: Domestic & global
— Digital knowledge Intermediaries (Quaks & cheats)
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Knowledge economy(cont)
— 2)Access to information: Medium skills
— Education, Health, Personal serv, Construction
— Standards, certification(4k-6k): Domestic quality
— Globalization: WFA, WFH; International standards
— 3) Higher Education & frontier skills
— Avg quality of PhD: Linkage & mentoring
— Global Value Chains
— AI, ML, expert systems
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Digital India: Infrastructure
— Pioneering 3rd way; Innovation; Inclusion
— Provide universal access, eliminate digital divide
— Hard Infrastructure
— Connectivity: Panchayat, village, habitation
— Free access for poor: Govt centers, schools, PHCs, SHCs
— Soft Infrastructure: Innovation vs monopoly
— Professional, independent regulatory system
— To guard against monopolization, due to Network Externality,
Data rents; Economies of scale & scope; Algorithm bias.
— Public operating systems for free & fair competition
— Universal interfaces(UPI), stacks(health), platforms(ONDC)
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Digital India: Leapfroging
— Scalability problem; solution
— India’s pop is 2x of US+EU
— Fin Tech,Tele-Education, Tele-Medicine
— Local, regional service hierarchy: break
— Hybrid supply to village clusters(shared STEM teachers)
— Urban specialist remote Rural delivery
— Access to Information(jobs), knowledge(work skills)
— Remote access to (India, World) jobs
— Work from Anywhere(WFA): Rural, small town, home
— WFH: Time/cost saving, Social acceptability (F)
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Green India
— Broader, diversified portfolio approach
— Transport: E-scooters, cars; mass transit systems
— Energy: Solar power, energy efficient appliances
— Urban: Integrated plan, invest, admin;
— Natural cities (Soni & Virmani)
— Housing: Energy efficient designs, local materials
— Recycling: Repairable/reusable designs
— Environmental Regulation: Tech/professional (EPA)
— Green stack: Info exchange, green market
— LIFE = Life style for environment (e.g. Millet)
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Tripolar World with Multipolar Rim
— Mid-century: USA, China, India
— Rim(Japan, Germany, UK, France, Russia)
— India’s Economic Power: VIPP = 0.83
— Global role: Reserve currency, IOCM, EM rating agency
— Globally integrated military industrial complex
— No 3 in demand for, & production of, weapons
— Peace through Deterrence:2020-40 (2025-35)
— High Tech decoupling: India needs flexibility
— Partial Ec. Decoupling (CCP Monopoly rents)
— India-USA partnership will play critical role
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Conclusion
— India High Income country mid-century
— Average quality of life EU (1995)
— Sustained fast growth in per capita income
— Paradox: Power rank(3) >> Income rank(90)
— Equality of Opportunity for all citizens
— Using under-utilized human resources
— Digital economy
— Use to provide high quality social services
— Upgrade human resources
— Growth driver of hybrid economy
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THANK YOU
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