India’s Rise in Global GDP by $ 100,000 Billion – The New Indian Express
All is not gloomy and catastrophic to come. There is good news amid the headlines of the world grappling with the Omicron Wave’s massive footprint as travelers are grounded, flights canceled, homework extended and cities under. curfew. The global economy is expected to be in a better place, on a higher ledge at the end of 2022.
In its 2022 report, the Center for Economic and Business Research informs that better than expected economic growth (at 4.2%) will propel global GDP to more than $ 100,000 billion, higher than it was before the pandemic and before the previous deadline of 2024. The well-being factor for India is that it will overtake France in 2022 to occupy the position of the sixth economy in the world.
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The contrast, the hopelessness sparked by the new wave and the hope for the economy, is fascinating – though not entirely inexplicable. The feelings of the public are influenced by the view in the rearview mirror, in large part the experience. The economic forecast is forward looking and estimates the response of what Adam Smith has called âinvisible handsâ, and more contextually resilience, to crisis and change. Of course, it all depends on how the world navigates the pandemic – and the upcoming Black Swan event.
The details of the CEBR report deserve special attention. The GDP of the United States at over $ 22 trillion is greater than the combined GDP of more than 150 countries. Just four countries – the United States, China, Japan and Germany – account for more than half of global GDP. That said, the economic center of gravity is visibly shifting to Asia, with China, Japan, India and Korea totaling more than $ 26 trillion in 2021. The report predicts that if China will overtake the US United in 2030, India will overtake Germany by 2031 will be the world’s third largest economy with a GDP of over $ 6.8 trillion.
In a sense, this could be interpreted as a return to a historical average. In his basic research on who was where in the global economy, British economist Angus Maddison estimated that incomes in Western Europe in 1000 were lower than those in India and China. In the 1700s, India and China held significant shares of world trade. This was before India’s (and China’s) wealth and resources were plundered by colonial powers after the 18th century. In 1950, India and China were both poor and disadvantaged in the global economy. The return of China and India to the forefront, even though three centuries later, also signals a tectonic shift in geopolitics.
It is true that the rise and reclassification of China and India has been and is fueled by demographics. Likewise, it is worth noting that demographics alone do not necessarily deliver the desired fate – around 42 percent of India’s workforce is deployed in agriculture and must subsist on one sixth of national income. To appreciate, consider the march of demography. India is expected to overtake China in population by 2026. When it does, India will have more people than China in about a third of the geographic area, and its GDP will be around $ 4.6 trillion. about a sixth of China’s GDP at $ 24 trillion. .
India’s biggest challenge is to move its workforce to productive areas. The reconfiguration of growth calls for sequencing and speeding up reforms. The rise of China illustrates this. In 1990, China’s GDP was $ 360 billion and India’s was $ 320 billion. China modernized its agriculture, followed by a rapid opening of its economy during the time of Deng Xiaoping.
India has been slow to the block. The much-lauded â1991 liberalizationâ came about as a result of a crisis, and reforms have been spotty. Economic growth requires the exploitation of the factors of productivity – land, labor, capital and now technology. Attempts to unleash productivity have been hampered by parochial partisan politics in the Center and in the States. The leverage effect of technology is limited by the inadequacies of the regulatory landscape. In 2021, China’s GDP is $ 16.8 trillion while India’s is $ 2.95 trillion.
Change doesn’t have to wait for another crisis. India is on the cusp of an overhaul and a global pivot given the emerging flaws in China. As the world pivots to support supply chain resilience, India can be the producer and consumer that global economies seek. It can show off its visible technological prowess (and the emergence of unicorns) to position itself as the much-touted âFourth Industrial Revolutionâ investment destination. Clearly, capitalizing on the opportunity requires quantum change in laws and regulations.
It has often been argued that India’s demographic dividend is being held back and affected by a democratic haircut. The scourge is not democracy per se, but the practitioners of politics. The point is, the dynamics of politics allow Indian parties to oppose while opposing what they are proposing to power. The Indian political class is invested in a policy of rent and forged a strong consensus for weak reforms.
Ambitious Indians are waiting for the dismantling of status quoism – for India to live up to the promise of its potential. The post-pandemic landscape of the economy calls for a reset in the way politicians practice politics.
Shankkar Aiyar is the author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution and Accidental India. He can be contacted at [email protected]