Speaking at the India Policy Forum organised by the National Council of Applied Economic Research (NCAER), Lahiri said higher investment, stronger domestic savings and structural reforms would be critical to sustaining economic growth.
While India has made significant progress in improving the ease of doing business, more needs to be done, particularly at the grassroots level, he said.
“The factors holding up investment in India are mostly structural. Factor market imperfection, especially in land and capital, is a major impediment,” he said.
He added that land acquisition for industrial as well as government infrastructure projects continues to face several hurdles, including legal challenges.On financing growth, Lahiri said investment is primarily funded through domestic savings. Although foreign savings have supported India’s investment needs, their contribution has remained limited compared with countries such as China and Singapore.
“India’s challenge is to create the most attractive environment for investment by removing structural obstacles, strengthening entrepreneurship and mobilising higher domestic savings. If these conditions are met, the country’s aspiration of becoming a developed economy by 2047 is well within reach,” said Lahiri.
Lahiri said India’s per capita income, estimated at about $2,813 in 2026, would need to rise to about $18,000-$20,000 by 2047. That would require nominal per capita income to grow at an average annual rate of about 9.25% over the next 21 years, implying a 6.4-fold increase.
While the target may appear ambitious, he said it is achievable, citing the experience of China, Japan, South Korea and Singapore, which recorded even faster growth during their development phases.
Lahiri said sustained economic growth depends on high levels of investment, which enable economies to adopt modern technology and improve productivity.
“Investment holds the key to higher productivity and growth,” he said, adding additional capital is critical to harnessing modern technology and boosting output.