Don’t shy away from Viksit Bharat. Give us a game plan. This is what Professor Charan Singh said to us this morning when we were backstage having a cup of tea.

And in that spirit, I’d like to first address the honourable members of the day, some of India’s finest economic minds, the distinguished public service leaders amongst us today, who share the vision of the Honourable Prime Minister for a Viksit Bharat 2047.

I am very pleased to present to you Macroeconomic Imperatives for Viksit Bharat 2047: India’s Path to a 20 to 35 Trillion Dollar Economy.

My purpose today is not to restate aspiration, but to examine macroeconomic feasibility with hard arithmetic and the structural conditions under which India can credibly achieve developed economy status by the centenary of independence.

I will proceed in six steps.
First, the 2047 vision and scale.
Second, a three-lever growth framework grounded in the Harrod, Domar and Solow growth models.
Third, GDP scenarios and investment arithmetic.
Fourth, India’s capital formation and savings constraints.
Fifth, structural reforms and productivity drivers.
And finally, policy imperatives, including a financial architecture innovation.

India’s stated objective is to become a fully developed high-income nation by 2047. In GDP terms, this implies a target range of 20 to 35 trillion dollars from roughly 3.5 to 3.7 trillion dollars today. That represents a 5.4 to 9.5 times expansion.

At a 30 trillion dollar economy, per capita income rises from about 2,800 dollars today to roughly 18,000 dollars, a six to seven-fold increase. This scale tells us immediately that the challenge is not intent, but macro arithmetic.

There are three macroeconomic levers, and growth theory reduces the problem to these three levers.

The first is capital accumulation. India’s gross fixed capital formation today is 30 to 32 percent of GDP, and the ambition implies that it should be somewhere in the range of 35 to 40 percent.

The second is capital efficiency, as measured by ICOR, the incremental capital-output ratio. India’s ICOR, by some estimates, currently sits between 4.0 and 5.0, and the target must be below 3.5.

The third is total factor productivity, growth beyond capital and labour driven by technology, skills, institutions, and governance. All three must move together, because no single lever suffices.

If we relook at ICOR for a moment, ICOR measures how much additional investment is required to generate one unit of GDP. Simply put, if ICOR equals four, we invest four rupees to produce one rupee of output. If ICOR equals three, we invest only three rupees. Developed economies operate around an ICOR of three. India averaged five in the 2010s and is now nearer to four. Every reduction in ICOR directly lowers the growth financing burden.

Total factor productivity captures efficiency gains from technology, innovation, skills, institutions, and management quality. The insight from the Solow growth model is critical: capital has diminishing returns, and sustained per capita income growth must come from productivity.

India’s post-1991 liberalisation significantly boosted total factor productivity. However, future growth must rely even more heavily on this channel.

The core hypothesis, ladies and gentlemen, is efficiency-driven growth. A brute-force strategy involving investment rates of 40 to 50 percent of GDP is unsustainable. The viable path, therefore, is doing more with less: lower ICOR and higher total factor productivity. Efficiency improvements are essential, not optional.

We therefore present four modelled scenarios. We examine four GDP scenarios for 2047: modest, baseline, vision, and ambitious, corresponding respectively to middle-income, high-income, developed, and advanced economy status.

Across models, GDP increases in increments of 5 trillion dollars, from 20 to 25 to 30 to 35 trillion dollars, all at market exchange rates. The required CAGR rises in increments of 0.5 percent across models, from 7.5–8 percent up to 10 percent in the ambitious scenario.

As Professor Charan Singh rightly said, a 2 percent gap can set you back 25 years. Therefore, we have taken modest 0.5 percent increments across models.

Per capita income rises in increments of 3,000 dollars, from 12,000 to 21,000 dollars across scenarios. The required investment rate, expressed as a percentage of GDP, rises by roughly two percentage points across scenarios, from 33–35 percent to over 40 percent, accounting for improved ICOR and strong total factor productivity growth.

The lower scenarios are feasible under current efficiency conditions. However, higher scenarios require structural efficiency gains.

Here is the hard arithmetic. With current efficiency and an ICOR of 4 to 5, a 20 trillion dollar GDP requires a 33 percent investment rate, while a 30 trillion dollar GDP requires 42 to 45 percent investment.

With improved efficiency, an ICOR below 3.5, a 25 trillion dollar economy requires 36 percent investment, and a 30 trillion dollar economy requires 40 percent.

The hurdle before us is this: the vision scenario of a 30 trillion dollar economy requires 9.5 percent growth. Without efficiency gains, this demands an investment rate of 42 to 45 percent of GDP. Sustaining investment above 40 percent is historically rare and fiscally difficult.

What this tells us is that efficiency is non-negotiable.

India’s gross fixed capital formation as a percentage of GDP is currently 32 percent, the highest in a decade, yet still three to eight percentage points below targets. Private investment announcements are up 39 percent year-on-year, and the private sector now accounts for about 70 percent of new projects. Government capex as a percentage of the budget is also at a ten-year high.

Domestic savings as a percentage of GDP are relatively low at 30 percent and must rise to at least the mid-30s. External commercial borrowings are 1.2 percent of GDP and are only supplemental, as we cannot rely on volatile external capital.

Momentum exists, but financing is the constraint.

The macro identity is simple: investment of 32 to 40 percent must equal domestic savings plus external flows. Today, domestic savings at roughly 30 percent plus 1.2 percent in external borrowings barely cover current investment. High-growth paths require significantly higher domestic savings to avoid external debt traps.

Household financial savings have declined to 5 to 5.3 percent of GDP, even though physical savings remain strong. External commercial borrowing stands at 190 billion dollars, about 5 percent of GDP. FY25 registrations are 34 billion dollars, with nearly 50 percent used for capex. Average ECB interest costs fell to 6.6 percent in 2024.

External capital helps, but cannot replace deep domestic savings.

On digital and technology reforms, the National Quantum Mission commits 6,003 crore through 2031. The India AI Mission allocates roughly 10,000 crore, including over 10,000 GPUs in a public-private compute grid. Their macro role is total factor productivity acceleration, not short-term stimulus.

On tax reforms, GST created a single internal market, reduced logistics costs, and increased formalisation, adding an estimated 1 to 1.5 percent to long-run GDP. The 2025 GST rationalisation focused on the 5 and 18 percent slabs with a revenue cost of 48,000 crore and gradual demand benefits.

The Direct Tax Code 2025 replaces a 60-year-old law, improving compliance and investment certainty. Labour laws have been consolidated into four codes, enabling easier hiring, apprenticeships, and higher formal job creation.

PM Gati Shakti has reduced logistics costs to 8 percent of GDP. The National Monetisation Pipeline has recycled 3.85 lakh crore, about 64 percent of the target, into new infrastructure. The Jan Vishwas Act decriminalises minor offences, improving trust-based governance. Startup India now counts over 100 unicorns, with tax holidays extended to 2030.

The Securities Markets Code Bill consolidates three statutes, lowering transaction costs, reducing regulatory uncertainty, and lowering the cost of capital.

Regional disparities remain stark, with per capita incomes in some states being three to five times higher than others. Developed economy status requires broad-based regional growth.

Growth theory aligns with evidence. The Harrod-Domar model links growth to investment divided by ICOR. The Solow model shows long-term growth depends on productivity. East Asian economies combined high investment with productivity catch-up.

One innovation proposal is Tokenised Rupee Debt Instruments, or TRDI. These are one-to-one backed digital tokens of government securities issued by regulated entities. TRDI is not a CBDC or a stablecoin, but tokenised sovereign debt within a regulated framework.

Evidence shows tokenised bonds have tighter spreads, better liquidity, and lower costs. These efficiency gains compound over decades, boosting productivity and lowering ICOR.

Pension and insurance pools can channel household savings into patient capital, lowering capital costs and improving productivity.

The policy imperatives for Viksit Bharat 2047 are four:
mobilising domestic savings,
improving capital efficiency,
boosting total factor productivity,
and sustaining structural reforms.

Thirty-three to forty percent investment, ICOR below 3.5, and accelerated productivity together form a feasible pathway.

In summary, Viksit Bharat 2047 is achievable only through efficiency-led growth. High investment, lower ICOR, and technological innovation together can deliver a 30 trillion dollar economy. Capital accumulation alone will hit a wall. India must get more output from every rupee invested.

This is a marathon of productivity, not a sprint of spending.

Thank you for your patience. I look forward to the discussion.