Indian Economy: There is a growing consensus that Asia is of late fast developing as the global centre for economic growth. And as a large emerging nation with a growing middle class, India has shaken the age-old myth of a poor developing nation, instead capturing the attention of the Western World and the developed economies, looking for investments and trade opportunities.
Whilst the Global Economy nose-dived, the Indian Economy surmounted the challenges of Covid19 quite effectively
When the world was reeling under severe economic recession due to the massive shock of the Coronavirus pandemic and various shutdown measures that plunged the global economy into severe contraction, India’s swift, effective and substantial policy responses to the pandemic, including financial support and economic reforms, led to a rebound to the economy and India emerged as the fastest growing world economies.
The S&P Global in its 29th September ratings has acknowledged that the global rising prices and increased Energy insecurity in Europe, have hit the growth of all major economies, but in stark contrast, India with an estimated 7.3% growth, this fiscal may be the ‘star’ among emerging economies. However, the International Monetary Fund (IMF), in its latest World Economic Outlook report, cut its forecast for India’s gross domestic product (GDP) growth in the financial year 2022-23 (FY23) by 60 basis points to 6.8 per cent, further reducing to 6.1% for the FY 2023-24, warning of a long and tough economic winter. According to IMF Economic Counsellor Pierre-Olivier Gourinchas “The global economy continues to face steep challenges, wrought by the persistent effects of three powerful forces: The Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the unrelenting slowdown in China,”
India replaces Great Britain as the 5th largest global economy
During the April-June quarter, India experienced an enormous 13.5% growth, which enabled it to replace Great Britain as the 5th largest global economy. There was an uncanny discontent in some quarters as a few surveys had predicted an even higher growth rate. But the long-term trajectory of the Indian economy seems set, with India expected to emerge as the world’s fourth-largest economy, overtaking Germany, by 2027. Remarkably, three of the four top national economies by then are expected to be in the Indo-Pacific region: China, Japan and India.
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POST COVID-With sustained strategic efforts can India replace out of favour China as the most preferred destination for investors?
Of course, this is not enough as many experts have rightly pointed out that India’s per capita income lags far behind nations that it is overtaking in terms of economic growth rate. A sustained strategic effort from the policy-makers is required to ensure the present trajectory continues for a substantial period and does not prove to merely post Covid bounce. And when China has run out of favour, serious reforms are required to project India as more investor friendly. As investors seek safer venues and avenues, Indian policymakers should be pragmatic and sharp enough to take utmost advantage of this unique moment when India’s geopolitical standing is at its pinnacle. Never before has India looked more credible than it does today with the world in utter disorder and India standing out as a beacon of hope.
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Few notable figures:
- IMF Projections: Indian Economy to touch 5 trillion by 2026.
- GDP is projected to grow at 8-8.5% in 2022-23.
- India surpasses China in adding new UNICORNS (1 billion USD Startup Company). According to the Hurun Unicorn Global India Index 2022 report’ between January and July 2022, India added 14 new Unicorns as compared to China’s 11. India stands 3rd in terms of the total no of Unicorns after US and China.
- India has surpassed Germany as the 4th largest automobile market. In 2021 India sold 37.6 lac vehicles, whereas Germany could sell 29.7 vehicles. In the current FY September is the 6th month in a row to have sold more than 3 lac cars.
- By 2026 India is expected to produce electronics worth $300 billion with an export target of $120 billion.
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