What will it take to Cross Over the
USA?

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Let us assume that USA per capita income grows at 1.5%, 2%, 2.5% and 3% for the next 250 years (i.e., we have 4 different scenarios).

Given that India's per capita today is 20 times lesser than USA (in PPP terms), and we want India to catch up with USA in 50, 100, 150, 200, and 250 years, what are the growth rates in per capita we need to target in order to reach this cross-over point?

We have seen that growth rates of 8-9% in per capita per year are easily achievable (as China has done in the past 15 years), and given two facts:

a) We are at least as smart as anyone else, such as the Korean/Chinese

b) We have recorded all the lessons we learnt from the mistakes of these Asian countries,

we can do 10-12% per year for long periods of time.

The question is: what is it going to take to beat the USA?

Well, here are the answers.

If USA per capita = 20, INDIA = 1, (using PPP), today

The table we need is:

Assumed USA growth rate
Years needed to cross over the USA 
 
50
100
150
200
250
1.5
7.8
4.6
3.6
3
2.7
2
8.3
5.1
4.1
3.5
3.2
2.5
8.8
5.6
4.6
4
3.7
3
9.4
6.1
5.1
4.5
4.2
 

The fundamental lesson to be learnt is that if we could do 9.4% p.a. we could catch up with the USA in ONLY 50 YEARS, even if it were growing at 3% p.a.

That is out of the world, however, a growth rate of 9.4% for 50 years. Also, the USA will be unable to grow at more than 2.5% p.a. for the next 50 yrs.

Therefore the target gr. rate for India, for a catch up with USA in 100 yrs, if it grows at 2.5%, is 5.6%.

Once more, economic theory and practice tells us that this rate is unsustainable for 100 years at a stretch. What can be done is to target very high gr. rates initially, at over 10% for about 20 yrs, and then the economy will in any case slow down, tapering off in the end to about 2% p.a.

Of course if we continue at the Socialist Growth Rate of 1.7% p.a. which we had since independence, even for another 100000 years also, we will never never catch up.

Today, the technology (institutional framework) needed to achieve this catch up is available with Economic science. We know that we have to set up minimally regulated markets, and encourage free enterprise, trade, and competition. We have to Banish Bureaucracy.

The question is essentially only one: who is going to bell the cat? It is in my self-interest and in your self-interest to only look after our own families. So, who is going to do the hard work required to reform the brilliant, but confused, Indian mind?

Who is going to tell the people of India that this is not a fool's fantasy - the catch up with USA, but a sheer inevitability, if we follow the lessons learnt in Economics over the past 250 years.

What is needed is political entrepreneurship of an unparalleled scale and magnitude.

You are needed to participate in the Task Forces, and in the Action Plan. I challenge each of you to contribute some of your spare time in promoting this effort.


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