India at 100 and the Significance of Top Six States

Abstract

India has a goal of achieving a $7 trillion economy in 2030, and subsequently a developed nation status by 2047. While some studies/reports have explored the possibilities of reaching these targets based on assumptions regarding the growth rate, inflation etc., this study is an attempt to forecast the future growth of the Indian economy till 2047-48, using the Markov Switching model and real GDP growth data from 1993-94 to 2022-23, and verify when these goals will be achieved. Since the economic outcomes are highly heterogeneous across the Indian States, and there are indications of divergence in economic growth, it also estimates and predicts the future growth prospects of the top six states to see how much these top states contributes to achieve the targets. The findings suggest that India will achieve the US$ 7 trillion target by 2032-33 and the per capita income level of developed nation by 2046-47, assuming 4.5% inflation and 2% depreciation of exchange rate. Tamil Nadu, Karnataka and Gujarat are expected to reach per capita income mark of developed nation by 2037-38, Maharashtra is expected to reach in 2040-41. West Bengal will reach this target by 2047-48, while Uttar Pradesh has to go a long way to reach this ambitious target.