India will remain one of the major engines of global growth primarily because it would stand out for its pace and steadiness of expansion amid a choppy world economic environment.
On July 26, Prime Minister Narendra Modi said that India will become the world’s third-largest economy within the next few years. On August 2, 2023, Fitch Ratings downgraded the US’ sovereign credit grade by one level from AAA to AA+ citing “a steady deterioration in standards of governance over the last 20 years” and said “repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management”.
On May 31, 2023, the provisional estimates of annual national income 2022-23 put out by the National Statistical Office (NSO) estimated that India’s real or inflation-adjusted gross domestic product (GDP) grew 6.1 percent during January-March 2023.
Beacon of hope
At first sight, 6.1 percent does not appear to be a sizzler. But placed alongside the world’s major economies, India’s growth performance clearly stands out as a beacon of hope for the global economy.
India towers over the statistical skyline of growth of major economies. Sample this: USA, the world’s largest economy grew 1.1 percent. China’s GDP rose 4.5 percent, and the Japanese economy expanded by 1.6 percent, while Germany slipped into a recession with a 0.3 percent contraction of its GDP during January-March 2023. India’s GDP grew 6.1 percent (compared to 4 percent in the same quarter of 2021-22), making it the fastest growing among the world’s topmost economies.
During the full year 2022-23, India’s GDP expanded 7.1 percent, slower than the previous year’s 9.1 percent expansion. In 2023 and for a couple of years beyond, India is set to grow at 6 percent-plus, which would firmly cement its place as the major locomotive driving the world economy.
India will remain one of the major engines of global growth primarily because it would stand out for its pace and steadiness of expansion amid a choppy world economic environment.
Last week, the International Monetary Fund raised its economic forecast for India this year amid a modest improvement in the global growth outlook but said that China’s post-pandemic recovery has weakened. According to the IMF’s World Economic Outlook update for July, India remains the world’s fastest-growing big economy with a 6.1 percent expansion this year, up 0.2 percentage point from the IMF’s April projection. More importantly, India is expected to account for a sixth of global growth this year.
The Economic Survey 2022-23 describes this as “a reflection of India’s underlying economic resilience; of its ability to recoup, renew and re-energise the growth drivers of the economy”.
Booming economy
India, clearly, has some distinct advantages to appropriate the China Plus One space over the medium term. How do you spot signs of an expanding economy? One of the surest signals can be found in shopping malls or neighbourhood shopping complexes or car showrooms. The footfalls in these have seen remarkable long-term growth over the last 15 years or so.
In 2005, an estimated 1.11 million passenger vehicles were sold in India. In 2022, an estimated 3.8 million passenger vehicles were sold in the country. During this period, India’s GDP grew from less than $1 trillion to about $3.3 trillion in 2022-23.
Global brands are also beginning to incorporate ‘Make in India’ an essential component of their China-plus plans. Apple CEO Tim Cook, who recently visited India, described it as an “incredibly exciting market” and a “major focus” for the company, as the Cupertino-based iPhone maker highlighted that business in India “set a quarterly record, grew very strong, double-digits year-over-year”. India is at a “tipping point”, he said during the Q2 earnings call of the company, where Cook mentioned India 20 times. Elon Musk’s Tesla, in a bid to diversify its supply chain beyond China, has eyed India as the next potential spot of manufacturing.
The most important long-run goal is about opportunities for economic growth. This involves creating jobs for the masses of young people who join the queue of job hopefuls every year. Of India’s 1.4-billion population, 60 per cent are of working age. Employment for all, with minimum wages and a basic income for sustenance, is vital for growth. Being consistently steady over the medium term will enable greater focus on these areas.
https://www.moneycontrol.com/news/business/economy/india-towers-over-major-economies-in-the-worlds-growth-skyline-11092031.html/amp
