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The Great Economic Resurgence

Europe represents the past, America the present, and East Asia, especially India the future. It is a matter of pride that, in the fiscal year ending April 2022, India is seen as the fastest-growing global economy, displacing China with 8.7% GDP from among the east Asian nations. It is remarkable that India achieved the distinction after nearly 22 years whence it posted 8.8% GDP. India is now the world’s fastest growing major economy. In another significant achievement, it has now become the 5th largest economy. With 3.5 trillion-dollar, it went past the UK economy of 3.2 trillion-dollar. India’s GDP in the April-June quarter was 823 billion USD whereas UK’s nominal GDP in the quarter was 763 billion USD. These figures are no flash in the pan. Actually, our economy had surpassed the UK nominal GDP even in the earlier quarter of January-March. Hence it is sustainable too. Further, all indicators point out to a lead that will only widen in the next few years. The IMF estimates that India would be a 3.54 trillion-dollar economy at the end of 2022 compared to UK’s 3.38 trillion-dollar. IMF further projects that India is likely to become a 5 trillion-dollar economy by 2026 whereas the UK would be just labouring at 4.35 trillion-dollar and that it will surpass the economy of Germany by 2027 and become the fourth largest economy in the world.

Now that only US, China, Japan and Germany are ahead of India, is it not a vindication of the policies of the government? However, it also is a fact that since, March, our rupee and the UK pound, both have weakened against the US dollar which means that both GDP’s have shrunken in dollar terms. The other GDP indicators that must worry us are the unemployment Rate of 7.8, inflation rate of 6.71 and an interest rate of 5.4


The obvious question seems to be, if the Indian economy could ever be larger than that of China’s? The simple answer is yes. What then, must India do to be there?

Historically, we were ruled by the British for over 200 years and most of our economy was destroyed in that period. Whereas we had a robust economy with a share of 23% of Global GNP, when the British arrived in 1820, it fell to 3% when they left in 1947. Our share still seems to be just about 3% whereas it should have been 18% since we contribute to 18% of the world population. With Indians at the helm of many multinationals today, they have certainly proved themselves to be as good as any in the world, if not better. Indians are the CEOs of 30% of Fortune 500 companies. According to 2015 statistics, India accounts for one-third of all engineers in Silicon Valley and 10% of the world’s high-tech business CEOs. Doesn’t the same apply to those in the country? Afterall, isn’t the GDP rising?

Did you know that the average per capita income of an Indian living in the US is about 55,000 dollars? In fact, overseas Indian communities have done very well for themselves and also to the nations they lived in. Of course, they achieve that with massive and enabling support systems further bolstered with the best research facilities in those countries, which we may not have. If we provide even half of that support system here, and are half as productive as we are in the US, we could still surpass the US GNP in the next decade or so. That it has not kept pace with its potential is only an indication of a great rise in population, inefficient or inadequate systems of transportation, logistics, or customs, poor connectivity in telecommunications, financial markets and information technology, lack of regulatory support stifling innovation, productivity, market growth, poor exposure to education, corruption and lack of systems to optimise opportunities in the past. That the current government is addressing all these is a positive. It however, needs to do much more.

As a society, we are passionate about everything we do and are hardworking as well. Kronos Incorporated, an international workforce management company, in their research study cite that the Indians are most hardworking employees in the world with 69% of them being full-time employees working five days a week. Then why can’t we be as successful in our country as we are in any other country? Probably we get a level playing field in every other country where we have been successful, which may be found wanting here. A socialist mindset of the past closed the economy for most of us within the country. So, what must our government do? Probably, open up the economy and allow the entire 1.4 billion Indians to compete, by providing a level playing field. Global economic competition is the key. It destroys the inefficiencies within the economy and allows interdependence of the world’s economies, cultures, and populations. This brings about cross-border trade in goods and services, technology, and flows of investment, people, and information.

Is open economy unfair to the poor? The truth is that trade ends global poverty. Hence most countries successful in the world are open to international trade. They innovate, improve productivity and provide higher income and opportunities to their people and hence grow faster. Open trade benefits the poor, giving them affordable goods and services. Global value chains drive economic growth and help reduce poverty. Closed economy trades less with the world and hence produces less wealth.

That the government is doing precisely all that is required to be done is encouraging. It however must overcome the many political, economic, bureaucratic, and psychological, vested interests to succeed. Its open FDI Policy is laudable. That FDI inflows reached record levels during 2020-21 standing at 81,973 million USD, a 10% increase over the previous financial year is a vindication of that policy. The World Investment Report 2022, ranks India eighth among the world’s major FDI recipients in 2020, up from ninth in 2019. Be it ‘Make in India’ or ‘Start-Up India’ or the labour reforms, the initiatives have all helped.

Not joining the Regional Comprehensive Economic Partnership (RCEP), that currently has 14 Asia Pacific Nations, must be a strategic decision. Indian interests are unique and cannot be compromised even as our policies, be it the industrial, trade, monetary, fiscal, agricultural, industrial, international trade or the EXIM are all well-modulated that support each other.

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