‘Economic dominance relies on compounding’: Sanjeev Sanyal maps out 35-year strategy to catch up with China

“You know the big growth of Korea, Japan, and more recently, China. This whole game is about compounding. The most powerful thing in the world is compound and compounding interest,” Sanyal said.

“China and India were actually at the same level of size of economy and per capita income in 1990. China then became the fastest-growing major economy in the world in the subsequent 35 years. It all happened because of compounding. India, incidentally, is the second fastest-growing major economy in the world. So it didn’t actually do too bad. But because there’s only a few percentage points difference, that percentage point has compounded over 35 round cycles. So that’s why we have ended up with them becoming a lot bigger,” he said.

“First of all, we haven’t done too badly. We have actually done rather well for the last 35 years, just not at the level of China. So if we want to catch up with China, we just have to grow for the next 35 years at the same percentage point faster than China grew over the last 35 years. Call it convergence. Now, you’ll be pleased to hear that we have been growing at about 2.5 percentage points faster than China over the last few years. So our game is to simply compound it over the next 25-30 years. We will get there,” he added.

Sanyal, who holds the rank of Secretary to the Government of India, addressed a packed audience of over 450 participants, including students, faculty members, researchers, industry leaders, alumni, and entrepreneurs, deliberating on India’s strategic roadmap towards becoming a developed nation by 2047 (Viksit Bharat @ 2047).

Referring to global economic headwinds ranging from the post-Covid recovery, energy price volatility, geopolitical conflicts in Ukraine and Iran, and the breakdown of global trade architecture, Sanyal warned against chasing short-term double-digit expansion at the expense of macroeconomic health.

“China didn’t grow on a sustained basis in double digits. There was actually a relatively small patch from around 2000 to 2008, where it grew at double digits. The rest of the time, it was growing around 8%. We are also growing in the 7 something percentage range. In the last quarter data, we had 7.8%, so not too bad. This is a very difficult time to simply begin accelerating. People who think we should just begin growing 8% will not be able to do it on a sustained basis if we do not look at macroeconomic stability,” Sanyal said.

“Growing fast is good, but you can only do this if you do it year after year of compounding. For every China or Korea that succeeded, there are a large number of countries that grew for a period and then didn’t,” he added.

Sanyal cited the Southeast Asian financial crisis of the late 1990s as a cautionary tale.

“In the 90s when I was at university, the countries supposed to be the great nations of the future were Thailand, Malaysia, Indonesia, and the Philippines. But those countries, after a few years of rapid growth, had a big crisis and never really quite came back,” Sanyal said.

“In the first few years as a policymaker, I spent time cleaning up the banking system. We had tried between 2009 and 2013 to force growth through expanding the financial system, misallocated capital, became one of the ‘Fragile Five,’ and ended up with a banking system that nearly blew up. It took years of cleaning up to get it where it is today. So yes, high growth, but never forget: maintain control over inflation, financial sector stability, fiscal debt, external debt, and do not use up foreign exchange reserves unwisely,” he said.

Responding to queries regarding economic fugitives residing abroad and government efforts to bring them back to face justice, Sanyal detailed the legal and diplomatic hurdles involved.

“The government has been prosecuting many of these people in these tax havens. Many of them fled more than a decade ago. It’s very sad, but jurisdictions in certain places like the UK actively discourage you from deporting them to India,” Sanyal said.

Drawing a comparison to long-standing criminal extraditions, he said, “Remember the case of arms dropping some 20 years ago involving Danish nationals, we have still not been able to extradite them. One of the common excuses made by European countries is that the conditions of Indian jails are not good enough.”

“I have always maintained that there are plenty of jails built by the Europeans when they were colonising here so those jails must be of European standards. Even Kalapani could be deployed as a European-built jail,” Sanyal said.

“The number of fugitives going out has dramatically come down. Most cases are legacy issues, but the Indian government certainly intends to bring back all these people. Meanwhile, many of their domestic assets have already been seized and liquidated,” he said.

During his primary address, Sanyal underscored that while massive structural overhauls grab headlines, continuous “process reforms” and small, targeted improvements in governance are equally vital for nation-building.

“India’s journey towards Viksit Bharat will not be driven only by big policy announcements, but also by thousands of well-designed process reforms that make governance simpler, faster, more transparent, and citizen-centric,” Sanyal said, adding, “Incremental improvements, when pursued consistently, create transformational national outcomes.”

He illustrated through case studies how systemic process mapping, eliminating procedural bottlenecks, reducing unnecessary compliance, and leveraging technology appropriately can transform public administration. Digitisation, he said, must enhance, rather than replace, well-structured administrative framework designs.

Welcoming the chief guest, Prof. Suman Chakraborty, Director of IIT Kharagpur, emphasised the vital role of higher educational hubs in driving national growth.

“The vision of Viksit Bharat demands institutions that can seamlessly integrate knowledge, technology, governance, and innovation. At IIT Kharagpur, we believe academia must actively engage with policymakers, industry, and society to co-create practical solutions for national development,” Chakraborty said.