India to become a Global Power by 2015 – Dr Arvind Virmani

India and China will become an integral part of the global power structure by 2015 and both countries will remain in that growth trajectory till 2020, before they leap frog to become a part of the tri-polar world along with the US by 2035, according to Dr Arvind Virmani, Chief Economic Advisor, Ministry of Finance, Government of India.

While addressing the members of the PHD Chamber yesterday evening in New Delhi, Dr Virmani clarified that for becoming a global power in the emerging global architecture, it is not necessary to become a developed country or a super power. He said that power is always relative and is measured by indices like GDP at purchasing power parity (PPP), level of technology (skill factor) and relative welfare measured in terms of per capita income. Hence both India and China, would become major power centers by 2015 even while remaining middle income countries on account of their having the highest population in the world. There will not be any marked change in the share of India’s population to the world’s population till 2050. But the share of China’s population to the total would show a significant decline, from a high of 22 per cent in 2002 to under 18 per cent in 2025, and would slide further to 16 per cent in 2050, wherein China will be overtaken by India in the population count.

Terming his views as purely personal and based on extensive research over a period of time, Dr Virmani said that the transformation of India and China into global middle income powers by 2015 would be through a combination of factors like economic, will to power, demographic, strategic positioning and alliances, defence technology and efficiency of public expenditure. And when power equations are measured in these tangible and relative terms, India and China would soon catch up with US. He, however, cautioned against the constraints posed by genuine democracies in the form of sensitivity to human rights and public opinion which would apply limits to the overwhelming use of force and thereby retard growth. Rogue States, which exist outside global economy, could also apply brakes to the growth engine.

Dr Virmani said that the tri-polar world, that would unfold by 2035, will have two strong powers –US and China- and India would be the ‘weakest pole’ among them with Indonesia not far behind, given that country’s demographic profile and power potential.

The Asian balance of power inherently gives all smaller independent nations greater flexibility and independence of action. Flag marking the challenges before the Asian powers, he observed that institutions of governance should be built and nurtured to provide for inclusive growth. This would help poor countries like India to catapult into middle-income countries of the future.

Rebutting a remark from the floor that inclusive growth in India is still kept on the back-burner, Dr Virmani said that, on the contrary, India has moved up significantly in the pecking order of development. This is borne out from the fact that our country is now occupying a third position in the bottom 10 countries, thereby emerging as among the most developed countries in the grouping. Measuring the income distribution in these countries through an econometric tool called Gini Co-efficent he has scientifically proved this fact. Exuding optimism in the pace of inclusive growth in India, he said that pro-poor policies, scientifically crafted and expeditiously implemented in India, would further reduce income disparity.

Dr Virmani refused to comment on a question about the rupee hardening and parried that the real exchange rate is the right barometer for measuring the exchange rate.