- That the global economy has taken a severe beating in the last three years owing to the pandemic-induced meltdown and the ongoing but going nowhere conflict between Russia and Ukraine has hogged the limelight needs no further elaboration. To add to the global community’s woes, the apparent disturbances in the Middle East perpetrated by Hamas’s terrorist attack on Israel will only exacerbate the already dicey situation. No wonder, even the supposedly most advanced and developed nations have suffered when the economy has steadfastly refused to scale up despite fiscal measures introduced from time to time. Thankfully, the Indian economy did face humongous challenges but appears to have traversed ahead as compared to other nations.
PC: TheEconomicstimes
- Over the last few quarters, the Indian GDP growth has sustained its upward swing notching up impressive figures and inviting admirable viewpoints from the economic experts. However, the moot point to ponder over here is whether the GDP percentages emerging from the challenging times are sufficient to allow the nation to stay on course to be counted among the best. Let’s delve deep to understand the same. As reported, India again retained its pole position among the world’s major economies in the IMF’s latest forecast on economic growth rates. In 2023-24, India is forecast to grow at 6.3%, followed by China at 5%. While India’s growth rate is expected to hold at the same level next year, China’s rate will slow down to 4.2%.
- Most importantly, another key takeaway from this round of IMF forecasts is that global growth outperformed the bleak expectations of March- April 2022. One of the reasons is that the Indian economy displayed a lot of resilience. But the good news about the economy needs to be tempered by the growth rate dynamics between India and China. China’s nominal GDP is $17.7 trillion, about five times that of India. With a baseline at that level, China’s contribution to the incremental addition to global GDP of $104 trillion will still be more than India’s at current growth rates. According to a recent report by Barclays, India needs to grow at not less than 8% for some years to overtake China in terms of contribution to the global economy. That is some ask.
PC: indiashippingnews
- Pushing up the trend in growth from about 6.5% to 8% requires us to address structural challenges that are a drag on economic momentum. GOI’s jobs data showed that since 2018-19, the last pre-pandemic year, and 2022-23, a part of the labor force has gone back to agriculture, the sector with the lowest productivity. In 2022-23, agriculture’s share of the workforce was 45.8%, over three percentage points more than in 2018-19. In 2022-23, only 11.4% of the workforce was in manufacturing. These trends limit the potential expansion of private consumption, the biggest segment of the economy. A structural transformation is a must to shrink the gap which will be the basis for realizing India’s geopolitical ambitions. The GDP should keep growing by more than 8%.
