However, India has a nano-demographic window to reach developed country status, and if it misses out, it might not, he added.
“There are two widely shared views on India over the next two quarter century, we need to grow at 8-8.5% to get there (developed country status) and if we miss that quarter century with a demographic dividend, we may be doomed to mediocrity forever,” Somanathan warned.
Although India is expected to grow at a compound rate of 7-7.5% over the next 25 years, Somanathan said several countries have become developed nations without their growth rate even reaching 6%.
He was speaking at the G Ramachandran Endowment Lecture on “Development in Times of Change: The Role of Government Effectiveness”, at the Madras School of Economics.
Somanathan said there was an impression that India would need to grow by 8-10% over the next quarter century to become a developed nation by 2047.
“Although we should be concerned about India’s growth rate and of course India should grow as fast as possible, and it has to, there is no need to panic if we are not growing at a particular target growth rate or if we’re not necessarily growing as fast as China or Japan in their peak periods of growth,” he said.
Somanathan said it shouldn’t be assumed that we would never reach our destination if we missed the bullet train. “We can get there on a slower train. We must have a realistic approach of how India will become a developed country.
India should have its own mode of growth since the Chinese model cannot be widely emulated for Indian conditions, he stressed the need for efficiency and devolution of more powers to all levels of government.