Indian Economy is WORSE Than you Think

Summary

The Indian economy is projected to grow from $3.5 trillion in 2023 to $7 trillion by 2030, potentially becoming the third largest by 2027. Despite this impressive growth, significant challenges remain, including high inequality, unemployment, poor education and healthcare, and inadequate infrastructure. The top 1% of Indians earn a disproportionate share of the national income, and labor productivity is low compared to other BRICS countries. India's growth is hampered by policy uncertainty, weak private investment, and a trade imbalance, but the current global landscape offers a chance for improvement.

Takeaways

• 📈 The Indian economy is predicted to grow significantly, expanding from $3.5 trillion in 2023 to $7 trillion by the end of the decade.
• 🏆 Over the last decade, India has risen from the 11th to the 5th largest economy in the world, surpassing countries like Canada, Brazil, Italy, Russia, France, and the UK.
• 🔝 By some estimates, India is on track to overtake Germany and Japan to become the third largest economy by 2027.
• 💔 Despite economic growth, India faces high inequality, with the top 1% earning 22.6% of national income and the bottom 50% only 15%.
• 📚 The benefits of development have not reached the poorest sections of Indian society, highlighting a need for more inclusive growth.
• 📉 Historically, India was the world's biggest economy but declined significantly during the colonial period, with its global output share dropping to 4.2% by the end of British rule.
• 🚀 Post-1991 economic reforms led to an acceleration in India's economic growth, although its growth rate has consistently lagged behind China's.
• 🌐 India's demographic advantage, with a young and large population, presents both an opportunity and a challenge for its economic development.
• 📊 India's unemployment rate has risen, and the labor force participation rate has declined, indicating a need for more job creation and better employment opportunities.
• 🏢 India's education and healthcare spending are relatively low, which affects the quality of human development and labor productivity.
• 🛠️ The country's infrastructure, including roads and public services, is inadequate, impacting the accessibility of education and hindering economic growth.
• 💼 India's manufacturing and exports face challenges due to poor infrastructure, complicated regulations, and a lack of capital investments.

Q & A

What is the predicted size of the Indian economy by the end of the decade?

The Indian economy is predicted to expand to $7 trillion by the end of the decade.

How has India's economy performed in terms of global ranking over the last decade?

Over the last decade, India has surpassed Canada, Brazil, Italy, Russia, France, and the UK in size, rising from the 11th largest economy in the world to the 5th.

What challenges does India face in terms of economic inequality according to the World Inequality Database?

The benefits of development have not fully reached the poorest sections of Indian society, leading to high inequality, with 22.6% of the national income going to the top 1% and only 15% to the bottom 50%.

How did India's economy perform during the colonial period?

During the colonial period, India's economy declined significantly, and by the end of British rule, its share in global output had dwindled to just 4.2%.

What was the impact of the economic reforms implemented in 1991 on India's economic growth?

After the comprehensive economic reforms were implemented in 1991, India saw a marked acceleration in economic growth, although its growth rate remained lower than China's.

What is the current unemployment rate in India according to the Centre for Monitoring Indian Economy?

India's unemployment rate has increased to about 7 to 8% from around 5% in 2018.

How does India's female labor-force participation rate compare to its Asian neighbors?

India's female labor-force participation rate is well below some of its Asian neighbors, indicating a significant gender disparity in the workforce.

What percentage of India's GDP is spent on education, and how does this compare to other countries?

India spends just 2.9% of its GDP on education, which is much lower than countries like Brazil and South Africa.

How does India's labor productivity compare to other BRICS countries?

When comparing the GDP per hour worked of BRICS countries, India has the lowest level of productivity.

What is the current state of India's infrastructure and how does it affect economic growth?

India's infrastructure, including roads, electricity, and public services, is inadequate, which hinders economic growth and the creation of productive jobs.

What policy has India focused on to improve its current-account balance and why?

India has focused on the 'Make in India' policy to increase manufacturing, which has improved its current-account balance to 1.6% of GDP in 2023 from a 4.8% deficit in 2012.