As the global economy slows down amid a vortex of uncertainties — two years of the pandemic, a war in Europe, and a recession on the anvil — there is a striking exception, India. We have not just moved completely out of the shadows of our colonial past, but have also leapt over the United Kingdom (UK) to claim the fifth spot in the league of the world’s largest economies. India is now the fifth-biggest equity market as well, with our global market capitalisation at an all-time high of 3.5%.
India is now the fifth-biggest equity market as well, with our global market capitalisation at an all-time high of 3.5%. (Representative Image)
This has set the ball rolling for the top spot. Just a decade ago, India’s economy ranked 11th, and the UK’s 5th. In the next five years, India can overtake Germany as the fourth largest economy. Germany’s nominal Gross Domestic Product (GDP) is estimated at $5.36 trillion by 2027, while India’s would be a $5.53 trillion economy by then. If we stay steady, before the end of this decade, India could outpace Japan to take the third position (where India’s GDP will rise to $8.4 trillion by 2030).
At this rate, history will repeat itself. The share of the economy in world GDP will most likely return to the early 19th century levels by 2047 (in 1820, the share was 16.1% vis-à-vis the current 3.5%).
This has been a story of the slow and steady winning of the race. The growth levers were put in place strategically, and well in time. It started by rolling out relief measures with a cautious approach, prioritising those who needed them the most. Contrary to the joint chorus by some to “spend, spend, spend”, India chose to be open to providing stimulus only after assessment of the exigencies of the pandemic, and the right time to rev up demand. As a result, debt was kept under check, fiscal space was rationed, and inflation, which for the UK may top 22% next year, has been relatively balanced, and is currently on a decline for India. Simultaneously, investment and consumption have shown a rebound, jump-started by the world’s largest Covid-19 vaccination campaign. The fear of a liquidity crisis for micro, medium and small enterprises (MSMEs) has now transformed into the golden age for Indian startups. The prime minister’s (PM) call for an Atmanirbhar Bharat (self-reliant India) has paved the path for achieving the milestone of the second-highest number of unicorns in the world.
As the economic shock of the pandemic subsides, the government has slammed the accelerator on the most strategic growth-inducing areas, introducing PLI schemes. Capex that averaged around 1.7% of GDP in the 2010s now amounts to 2.9% for 2022-23. 28% of the capex budget has already been spent. This, combined with the push to infrastructure (a 35% y-o-y increase in capex and proposed infrastructure spend of over ₹10 lakh crore) that will be created through PM Gati Shakti, will allow private investments to kick in — a model championed by PM Narendra Modi in building the Gujarat model of development as the state’s chief minister. It is noteworthy that he has not only focused on reviving sectors critical for employment generation, but also is giving a push to nascent-yet-high-potential sectors, such as drones. Like drones, the foundations for Digital India were laid through the JAM (Jan Dhan-Aadhaar-mobile number) trinity and the Bharat Net Programme between 2012 and 2015. These solid foundations will be utilised for ensuring inclusive and sustainable growth in the future.
Thus, what seemed like an endgame for India’s story in the last two pandemic-stricken years, emerged as a game changer instead. Those who predicted India could land up in a Sri Lanka-like situation or criticised this government for setting highly ambitious (unachievable) targets, underestimated the potential of India’s growth. The fact that the Indian economy, which was $2 trillion in current US dollars in 2014, has jumped to $3.2 trillion today, serves as proof.
In all this, a formidable combination precedes India’s rising global position, which is that of a leader whose vision captures the collective imagination of 1.4 billion Indians, and a growing young population that continues to exhibit tremendous osmotic capability to absorb new technology, ideas and ways of living. One of the Panch Prans (five pledges) laid out by PM Modi to transform India into a developed country by 2047 is to learn our lessons from the past, but do away with colonial remnants. The new engisn of the Navy, and the reincarnation of Rajpath as the Kartavya Path, hence, are not isolated events, but mark the beginning of India’s re-arrival as a global superpower.
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