Prospects for breaking into the Top 5 largest economies should boost domestic sentiment as India gears up for general elections
India’s potential to overtake UK and catapult itself into the top five largest economies globally this year would be a rare moment. World Bank, World Economic Forum and India’s Central Statistics Office (CSO) among others have pointed to this possibility even as India braces to criss-cross some important milestones on the economic front. In the face of opposition parties’ accusations of economic mismanagement, these predictions come as a big morale booster for the Narendra Modi government ahead of the Lok Sabha elections. In an election year, these reports could well be trumped up by the ruling establishment to win votes. Polls apart, the three reports put out in the public domain simultaneously over the past few days point to untapped potential in the Indian economy that needs to be harnessed with the right policy matrix and stable government formation in May this year. The World Bank’s global projections have had India at the epicenter of high growth trajectory in the next three years at about 7.5 per cent. The Bretton Woods institution’s 7.3 per cent growth projection for this fiscal is a wee bit higher than even RBI estimates or finance ministry’s expectations at 7.2 percent.
With robust back-to-back growth in the last four years, India is expected to tame its erstwhile colonial masters, the UK. Only the US, China, Japan and Germany may continue to lead ahead of India in terms of economic size. However, it might be overambitious to think that India would touch earlier projections and become a $5 trillion economy by 2022.
India’s CSO has made some very optimistic projections for GDP to touch a whopping Rs 188 lakh crore. This means that per capita income would cross Rs 141,447. These numbers may look very impressive for the layman. But, at Rs 70 per dollar, India’s per capita income would continue to be pale at $2020 vis-à-vis US $59,531, UK’s $ 39,720 and global aggregate of $ 10,714 world-wide a year back.
The report put out by WEF predicting India to be the third largest consumption market globally is not only interesting but holds promise for the future. WEF projections that Indian consumption market would expand to $ six trillion by 2030 behind China and US is a big positive. A large consumption market gives Indian economy managers a lot of relief in management unlike China that saw exports-driven growth in the last one decade. But, all these three reports may sound a word of caution. Unless the policies are devised optimally, the growth, per capita wealth distribution and consumption may not be inclusive. In the sense, the party that assumes power later this year has huge challenge on its hand to ensure that growth is inclusive of rural markets, skills development and social development indicators improve substantially.