Will India overtake China on the economy front? Experts Answer
India is projected to become the world’s third largest economy by 2029
- According to the IMF, India’s economy will continue to grow the fastest among all the major economies of the world.
- In the 1990s, the Chinese economy was only slightly larger than that of India. Today China’s GDP is 5.46 times bigger than India
- Prime Minister Narendra Modi has set an ambitious target of making India a developed nation by 2047.
- The size of the Indian economy will reach $ 20 trillion by 2047 provided the annual average growth is 7-7.5 percent over the next 25 years.
A recent report by the World Bank states that in 2020, more than five and a half crore Indians went into poverty due to Kovid-19.
A few days ago, in a recent report of the IMF, it was estimated that the growth rate of India’s economy will be 6.8 percent in 2022. Earlier this estimate was 7.4 percent.
The IMF also says that the growth rate may fall further in 2023 and it is estimated to be 6.1%. However, it has also been said in the report that India’s economy will continue to grow the fastest among all the major economies of the world.
Despite these reports, many industrialists, ministers and economic experts in India expect that in the coming years, India’s economic pace will grow so fast that it will overtake China too. China is currently the second largest economy in the world after the US.
The reason for this optimization is that by the end of March this year, the Indian economy has overtaken the British economy and became the fifth largest economy in the world.
According to a research paper by State Bank of India, India will overtake Germany’s fourth largest economy by 2027 and Japan’s third largest economy in the world by 2029.
At this pace, will China be the next stop for the Indian economy? Can it even surpass the world’s second largest Chinese economy in 15-20 years?
In other words, can today’s $3.1 trillion Indian economy come close to or surpass the $17.7 trillion Chinese economy?
Older generations will remember that once upon a time the Gross Domestic Product (GDP) of the two countries was almost equal. In 1990, the Chinese economy was only slightly larger than that of India, but today China’s GDP is 5.46 times larger than that of India.
Can India be the next China?
Those who have little knowledge of China’s economy, dismiss this question as impossible. The goods exported from China are so dominant in India’s markets that they do not even dare to compare it with the Chinese economy.
Some of the world’s biggest economists also call the debate on this issue a waste of time. Noted American economist Steve Hanke is Professor of Applied Economics at Johns Hopkins University, who has also served on the Economic Advisory Council of US President Ronald Reagan.
Speaking to BBC Hindi, he says, “India is plagued by problems. Out of 165 countries in the Cato Institute’s Human Freedom Index, which measures personal, civil and economic freedom, India ranks 119. For example In scores given on the rule of law, which includes procedural justice, civil justice, and criminal justice, India’s record is among the worst in the world.”
He adds, “No country can expect strong, sustained economic results without a strong adherence to the rule of law. The trend in India over the past 10 years has been a downward trend. In 2008, India ranked 89th.” Which has come down continuously to 119th place.”
According to him, China’s rank is also below India, it is ranked 150th out of 165 countries included in the Human Freedom Index of Cato Institute. China is also moving downwards. In 2008 it was placed at 126th place. Looking at these metrics, it appears that both the countries are losing.
Prime Minister Narendra Modi has set an ambitious target of making India a developed nation by 2047. But even this goal will not be enough to challenge China. In fact, surpassing China’s economy looks like an impossible goal.
Just consider, according to the World Bank, India’s GDP in 2021 was $ 3.1 trillion and that of China was $ 17.7 trillion.
If the Chinese economy is stopped here and the Indian economy continues to grow at the rate of 7-7.50 percent, then its economy will be $ 20 trillion, that is, it will take about 25 years for India to surpass today’s Chinese economy.
The Prime Minister’s Economic Advisory Council (EAC-PM) chairman Bibek Debroy said on August 30 that the size of the Indian economy will reach $20 trillion by 2047, provided the annual average growth is 7-7.5 percent over the next 25 years.
On Tuesday, the IMF said in a press conference that the Indian economy will grow from 7.4 percent to 6.8 percent in 2022 and even less in 2023. Economists say that forget to beat China at this rate, it will be almost impossible to compete with it.
But can we learn anything from recent history? As two large developing Asian economies with similar populations, China and India both started their economies from virtually zero after being freed from war and slavery.
In 1947, India became an independent nation from the British Empire, while two years later in 1949, the People’s Republic of China was established.
The economies of the two countries were almost identical till 1990. So why can’t it happen again, especially at a time when China’s growth rate is slowing down while India’s economic growth rate is consistently above 6 percent.
The IMF has also said that India’s economy will continue to grow the fastest among the major economies.
Many optimists in India and in the West claim that if India continues to take the right steps, India could be the next China in the long run.
