20 reforms that can take India to a $20 tn economy

India may attain a $20 trillion economy by 2036, contingent upon a comprehensive reform strategy rather than a singular growth catalyst, according to an Equirus research report. The report outlines a 20-point agenda spanning infrastructure, capital markets, human capital, services, urban governance, and the broader economy. Closing the gap between planned and actual capital spending in states could boost GDP by approximately Rs 5.2 trillion without necessitating additional borrowing.

Establishing an India sovereign fund, akin to Singapore's Temasek, could provide a recurring funding source for infrastructure and other priorities, potentially offering a capital injection of about $249 billion. Deepening India's capital markets could involve equalizing tax treatment between bonds and equities, gradually transitioning some small-savings into market-priced bonds, discontinuing advance tax, and lowering tax deducted at source on investment income to a uniform 5%.

Services, presently constituting around 54% of GDP, would need to escalate to 65% while increasing their economic value from $2 trillion to over $11 trillion. Enhancing global capability centers could be pivotal, with a proposed national policy aiming to augment their count from over 1,800 to 5,000, which could generate an economic impact of $470-600 billion and create 20-25 million jobs.

Tourism could also contribute substantially, potentially earning an additional $21 billion annually if India emulates Turkey's performance. Enhanced productivity and innovation are crucial, with the report urging the reinstatement of research and development incentives, fostering private participation in education, outcome-based university funding, and scaling up apprenticeship programs.

These reforms could elevate underlying GDP growth from approx. 10.5% to 14.2%. However, even this acceleration may not suffice to attain a $20 trillion economy in dollar terms; the rupee would need to appreciate by roughly 3-3.6% annually.