India has the potential to become a $9.5 trillion economy over the next 10 years with prospects of the country becoming a developed nation by 2047 within reach, Arvind Panagariya, chairman of the 16th Finance Commission, said on Saturday.

“From 2003-24, in the last 21 years, the growth rate has been 10.1 per cent in dollar terms at current prices. If we maintain this growth rate for the next 10 years, India will be a $9.5 trillion economy,” he said. He also underscored the importance of maintaining macroeconomic stability and democratic governance as preconditions for sustained growth.

Panagariya said that India needs to maintain a growth rate of 10.1 per cent in dollar terms at current prices to reach the high-income threshold of $14,000 per capita income by 2047.

“Per capita income of $14,000 is the threshold that India must cross to classify as a high-income country at 2023 dollar prices. The per capita growth rate needed is 7.3 per cent to achieve this,” he said at the 49th Civil Accounts Day celebrations in New Delhi.

With India’s per capita income in 2023-24 standing at $2,570, Panagariya emphasised that there is substantial room for further increase.

According to the World Bank, India’s GDP in current US dollars was $3.57 trillion in 2023. IMF has said that India will retain its position as the fastest-growing major economy by clocking a GDP growth of 6.5 per cent in 2025-26, on the back of robust private investment and macroeconomic stability.

Panagariya said that the looming threat of reciprocal tariffs from the US could be turned into a positive if India can leverage it to secure mutual tariff reductions.

He, however, cautioned that if it results in a tariff war, where the US imposes tariffs on India and New Delhi retaliates with its own tariffs, it would have an “unfortunate” outcome.