India’s economy is in the “fast lane” and if productivity growth as well as living standards continue to be around 6 per cent level each year, it will soon catch up with developed nations.
According to the latest report released by McKinsey Global Institute, the 6 per cent growth has helped India uplift more than one billion people out of poverty over the past 25 years.
India and China were responsible for nearly half the productivity gains witnessed between 1997 and 2022, which helped them lift nearly a billion people out of poverty, the report said.
“China, India, most of Central and Eastern Europe, and some other individual economies are in the fast lane. Thirty emerging economies, representing 3.6 billion people, are in the top third of performance. On average, their productivity growth was about 6 per cent per year. This enabled more than one billion people to escape poverty over the past 25 years in China and India alone,” the report said.
At their 6 per cent rate, an average fast-lane economy with a productivity level of $34,000 would take 28 years to match the advanced-economy average, the report further said.
McKinsey Global Institute further mentioned that over the past 25 years, the world experienced strong productivity growth, largely driven by India and China. Also, both these nations have accounted for nearly half of aggregate global productivity growth
The report further said India’s early upgrading of digital infrastructure and workforce skills in the 1990s enabled it to become a global IT leader, especially in software.
“India would need to keep up investments to urbanise effectively, build infrastructure, support service productivity and build higher-value manufacturing. For this, the right enablers need to be in place, from institutions that incentivise investment and innovation to education that allows workers to make the most of those investments,” Rajat Dhawan, managing partner, India, McKinsey & Company, was quoted as saying by The Economic Times.
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If India’s productivity keeps growing at 6%, it will catch up with developed nations: Report
