Indian Economy: Higher Ranking or Resilient?
Should India be the economy with higher ranks or Should we focus on creating a resilient economy?
A question that the Indian Government and policymakers should ponder!
Why this question?
India has overtaken the United Kingdom to be the fifth largest economy in the world in 2021, according to International Monetary Fund (IMF) data. The calculation is based on US dollars and as per the IMF; India is set to keep the momentum going this financial year as well.
The size of the Indian economy in “nominal” cash terms in the quarter through March was $854.7 billion. On the same basis, the UK was $816 billion.
If India can continue to achieve rapid economic growth of at least 7%, then the dream of a $5 trillion economy may come closer, and the road to becoming the third largest economy in the world smoother.
India is poised to take over Germany as the fourth largest economy in the next 5 years according to IMF projections. Germany’s nominal GDP is estimated at $5.36 trillion by 2027 while India would be a $5.53 trillion economy by then.
The size of the Japanese economy in 2022 is $4.91 trillion. By 2027 it is expected to reach $6.26 trillion. This sets it just $1 trillion ahead of where India is projected to be at that time. Analysts suggest that if the robust growth continues and no shocks are dealt to India then it would not be unrealistic to assume that India could outpace Japan too, going forward. Within a decade, India could be the third largest economy in the world.
A decade ago, India ranked 11th among the largest economies in the world. This would be quite a leap.
The top two spots are occupied by number one the United States followed by China. By 2027, China’s economy is estimated to be $29.13 trillion, just short of the US at an estimated $30.97 trillion.
A line of Thought
The race of becoming a fast-growing economy and higher ranks would go on forever. Even if India becomes a $5 trillion economy or goes ahead of other nations, India won’t stay always in that position. As it’s a competition, there are going to be other countries that would go ahead of India. So should India’s focus be the position or the adaptability to sustain through high and low growth times?
Adaptability can also be seen as the characteristic defining resilience of an economy. Resilience means in every situation that arises, the quality of the standard of living for people is ensured. Of course, due to changing times, there will be an impact on the lives of people both positive and negative. However, if resilient mechanisms are set then the economy and the people involved could adapt to situations with minimal losses.
India’s approach to looking at growth can be different from the rest of the world.
Ranks, positions, and growth rates are volatile concepts in themselves. The more India focuses on them, the more short-term goals India is focusing on. So will the benefits or returns pertaining only for that short duration of time.
On the contrary, a resilient economy is a long-term goal but beneficial to the people and the economy. Resilience, adaptability, and sustainability allow the market stability that investors seek. To grow further and faster, India is looking to increase the level of investments in the country, and focusing on creating a resilient economy would pave the way.
Vaibhavi Pingale
Ms. Vaibhavi Pingale is a Visiting Faculty of Economics at Gokhale Institute of Politics and Economics, Pune & at Savitribai Phule Pune University. She is pursuing her PhD. She has been actively writing media articles other than academic research.
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