By P Mohan Chandran
Can a nation, rich in culture and history, with a burgeoning youth population, truly ascend the global economic ladder, surpassing stalwarts like Germany and Japan? Is it merely about numbers, or is there a deeper narrative at play?
India, a land of contrasts, stands at an economic crossroads. Prime Minister Narendra Modi's ambitious proclamation of India becoming the third-largest economy by the end of his third term is not just a political statement but a reflection of the nation's aspirations. But as the clock ticks, the challenges and intricacies of this goal come into sharper focus.
The Current Landscape:
With a GDP of $3.38 trillion, India is on the heels of Germany ($4 trillion) and Japan ($4.2 trillion). The past decade has seen India's nominal GDP grow at an average of 6.3%, while Germany and Japan have lagged behind. The decline of Japan's GDP at 3.8% and Germany's modest growth of 1.43% over the past decade offers a glimmer of hope. Debopam Chaudhary, Chief Economist of Piramal Enterprises, aptly points out the shrinking phase of these two economies, marked by an ageing population and weakening demand.
But is overtaking these economic giants merely a function of their decline and India's growth?
The Road Ahead:
Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor of State Bank of India, posits that by 2027, India could surpass both Japan and Germany. From being the 10th largest economy in 2014, this leap would indeed be monumental. Gaura Sengupta, India Economist of IDFC First Bank, further elucidates that India's share in Emerging and Developing Asia's GDP is set to rise, reversing a declining trend.
The Underlying Challenges:
However, size isn't everything. India might be the fifth-largest economy, but its per capita GDP ranking tells a different story, placing it at a dismal 146th. By 2027, even with a per capita GDP of $3,500, India will trail behind 130 countries, including smaller economies like Bangladesh.
So, what does it truly mean for India to be the third-largest economy?
The UNDP's Multidimensional Poverty Index paints a sobering picture: 231 million Indians grappling with multidimensional poverty in 2021. While GDP growth is indicative of prosperity, it doesn't necessarily translate to widespread affluence. The journey from growth to development is a nuanced one, encompassing equitable income distribution, infrastructure, urbanization, and stable livelihoods.
The Way Forward:
To truly reap the benefits of economic growth, India must focus on holistic development. The Economic Advisory Council of PM (EAC-PM) suggests a sustained growth rate of 7-7.5% over the next 25 years to achieve a per capita income of $10,000. This isn't just about numbers; it's about ensuring a decent standard of living for its vast population.
India's quest to become the third-largest economy is more than an economic goal; it's a testament to its aspirations, challenges, and potential. As the nation gears up for this monumental journey, one question remains:
Will India's rise to economic prominence be marked merely by numbers, or will it be a testament to its commitment to holistic development and prosperity for all?
Do you believe India can become the top-3 economies in the world?
A. Yes, India has the potential to be among top-3 economies.
B. No, it's a Herculean task requiring Sisyphean effort.
© 2023. P Mohan Chandran. All Rights Reserved.
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