Hindu Editorial Analysis : 11-December-2023
India’s economic outlook for 2023-24 is marked by various projections, with the Reserve Bank of India foreseeing a 7% growth, while the IMF and World Bank estimate a slightly lower 6.3%. Despite the recent 7.8% and 7.6% growth in the first two quarters, India’s journey to becoming the third-largest global economy by 2027 is undeniable.
Global Comparison
Examining the period from 2014 to 2023, India’s GDP surged by 83%, closely trailing China’s 84% increase, while surpassing the US’s 54% growth. Among the top 10 economies, only China, India, and the US witnessed growth, signaling global economic shifts.
Emerging Challenges
Deglobalisation Impact
The rise of deglobalisation, intensified by geopolitical conflicts, is reshaping economic dynamics. Sanctions and disruptions in international settlements pose challenges, impacting supply chains and global demand. Importantly, India must reassess its export-centric growth strategy.
Savings Dilemma
A concerning trend is the decline in the household sector’s savings, dropping to 5.1% of GDP in 2022-23. This poses a risk to India’s growth potential, as surplus household savings fuel government and corporate investments.
Widening Gaps
Moving from the 10th to the 5th global rank was relatively straightforward, but the substantial gap to the top two economies poses a greater challenge for India’s ascent.
Per Capita Disparity
India’s per capita GDP at $2,600 lags significantly behind its global counterparts, raising concerns about rising inequality and potential consequences in pursuit of growth.
Strategic Suggestions
Domestic Focus
To sustain a 7% plus growth, India needs a heightened focus on domestic growth drivers, with a crucial reliance on robust domestic savings.
Employment and Skilling
Given a burgeoning working-age population, substantial investments in training and skilling are imperative to match job seekers with evolving labor-saving technologies.
Technology-Led Growth
Embracing productivity-enhancing technologies, especially Artificial Intelligence and Generative AI, can catalyze overall economic growth.
Service Sector Emphasis
Amid global climate commitments, India’s service sector growth, aligned with initiatives like the Green Grids Initiative, can mitigate adverse environmental impacts and bolster sustainable development.
Fiscal Responsibility
Upholding fiscal responsibility targets is paramount for sustained growth. Achieving a combined fiscal deficit and debt to GDP ratios of 6% and 60%, respectively, will ensure financial stability and foster economic resilience.
Why In News
India’s future growth strategy needs to be calibrated in view of the changing global conditions, ensuring adaptability to emerging economic trends and fostering robust international partnerships for sustained progress.
MCQs about Charting India’s Economic Future
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Which country has India overtaken in terms of GDP growth from 2014 to 2023?
A. United States
B. China
C. United Kingdom
D. France
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What is the primary challenge highlighted in the essay regarding India’s growth potential?
A. Climate change
B. Household sector’s savings decline
C. Global political conflicts
D. Technology adaptation
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what is a key area for India to focus on in achieving sustainable growth?
A. Increasing dependency on global exports
B. Reducing investments in technology
C. Emphasizing fiscal irresponsibility
D. Prioritizing domestic growth drivers
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