Finance minister Nirmala Sitharaman said on Friday she envisages India’s per capita income to jump $2,000 in five years.

The minister acknowledged the challenges posed by geopolitical factors and the rapid advancement of artificial intelligence (AI).

“While India’s economic performance is credible, there are certain challenges, including geopolitical ones and the advent of artificial intelligence, which may pose a threat to prosperity,” Sitharaman said at the Kautilya Economic Conclave here.

The finance minister said India’s current per capita income stands at $2,730, according to the International Monetary Fund (IMF).

She said reaching the next milestone of $4,730 would occur within a much shorter timeframe, propelled by continued economic reforms, a youthful population and strong consumption patterns.

“The next few decades will define a new era for India, with living standards for the common man improving at the fastest pace in history.”

The minister emphasised the need for India to develop domestic capacity to achieve its ambitious economic goals. She warned that persistent geopolitical challenges and the disruptive impact of AI could hinder the country’s progress.

The Economic Survey 2023-24 highlighted the transformative impact of AI on the job market and the need for collaboration between the government and private sectors to leverage this technology for job creation.

Sitharaman underscored the government’s commitment to reduce the fiscal deficit, which is projected to decline to 4.9 per cent of GDP by 2024-25, down from 5.6 per cent in 2023-24.

Buoyant tax revenues and restrained expenditure growth are expected to help achieve this target. The quality of spending is alsoimproving.