It is possible to imagine India striking out into the next decade to become the second largest economy in the world not by 2048, but by 2031 and the largest economy of the world by 2060, according to Michael Debabrata Patra, Deputy Governor, Reserve Bank of India. In this context, the principal task of monetary policy is become the anchor of the Indian economy. Short-run fluctuations of aggregate demand have to be managed pro-actively so that a broad alignment with the economy’s evolving productive capacity is ensured. Price stability is the best contribution that monetary policy can make to strengthen the foundations of the aspired trajectory of growth over the next few decades.

Patra noted this in a latest speech and highlighted that if India can grow at the rate of 9.6 per cent per annum over the next ten years, it will break free of the shackles of the lower middle income trap and become a developed economy. These gains need to be reflected in per capita income with two milestones – a per capita income level of US$ 4516-14,005 to reach middle income country status, and beyond that level to attain the position of a developed country today. By 2047, however, the developed country threshold will have moved up to US$ 34,000.

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