 "Now Japan, next Germany: India must leverage domestic demand, self-reliance to keep rising")
India’s steady growth of over 6 per cent in GDP per annum year-on-year over most of the past decade is powering it into the top of the table as it overtakes advanced economies with low growth or even shrinkage. Since 2014, when the first Modi administration took office, India has climbed from the 10th to the 4th spot among global economies—and is still rising. Before the current NDA term ends in 2029, India is expected to secure the third slot.
And the best thing about it is that India, that is Bharat, will keep growing at over 6 per cent if it keeps itself aloof from major geopolitical disruptions, pandemics, trade conflicts, pressures of cartels, sanctions, artificial scarcities, the ravages of addictive and illegal drugs, and is blessed by ample food security.
This is based primarily on the consumption demands of its formidable domestic economy. With 1.4 billion plus people, of which nearly 65 per cent are under 35 years of age presently, there is a massive and useful demographic dividend compared to ageing China with the effects of its one-child policy, though now reversed. The Indian age advantage is likely to last for another 15 years at least.
India is vulnerable as a major petroleum importer for over 80 per cent of its needs from diversified sources. But it is taking strong steps to increase its green energy component from nuclear power, including its own manufacture of small reactors, solar, hydroelectric, wind, lithium-based battery electric, hydrogen, ethanol blending, and so on.
Impact Shorts
More ShortsJapan is the latest to be surpassed by India’s economy at $4.19 trillion, according to IMF data quoted by India’s own Niti Aayog. Germany is the next economy to be overtaken to put India at the third spot. This will happen when it reaches near the $5 trillion mark, expected in the next two to three years.
And at the No. 3 slot, India is expected to stay for the coming decades, but gathering more and more heft all the while as the time passes. This has major implications for the development of India’s infrastructure, modernisation and defence manufacturing and the resultant import substitution/exports. It could even accelerate the pace of growth to over 7 per cent or more.
Defence preparedness is of the utmost importance with two hostile neighbours working in tandem. This is ironic in some ways, because India does a massive amount of trading with China in multiple areas where its manufacturing value chain has not yet sufficiently developed.
Pakistan fights India for religious and ideological reasons, but China, whilst appreciating the trade, wants to halt India’s fast-track progress. It also covets its land. In addition, the Western powers and America are also unhappy that India is slipping out of their biddability, if not control.
Japan, even though it is a G7 power, is Asian and less threatened by India’s growth. It is more willing to share technology and cooperate with India, as in the bullet train technology being developed.
However, on its own, the Indian economy is not particularly indebted and is highly resilient against domestic and global shocks, with its customary tight management. This is regularly praised by the multilateral lending agencies and the global rating agencies.
Startlingly, long-term projections see India clocking up $52.5 trillion by 2075!
It already has the third largest number of billionaires at 205, only behind China’s 450 and America’s 902. In 2075, not only will the Indian population have been declining for a quarter century, but its economy will be placed only marginally below China.
China is projected to become the number one economy by then, at $57 trillion in GDP. However, there is some credible doubt on whether China will stay intact, given its present economic and political woes. It is expected to break into five countries in the 2030s itself, according to some think tanks, plagued by internal instability rather than outside intervention. And this, soon after its protégé and protectorate, Pakistan, already bankrupt, implodes. The Islamic republic is unlikely to survive as a country in its present form beyond the end of this very decade.
Meanwhile a radicalised Bangladesh, also nearly bankrupt, in collaboration with Pakistan and China, will meet stiff resistance from India if it undertakes any misadventures. The situation in Myanmar is also volatile and worthy of careful observation to prevent it from boiling over into India’s northeast. The Indian Ocean, the Bay of Bengal, and the Arabian Sea are also being monitored by India, its satellites, navy, and air force for potential threats.
Relationships with Sri Lanka, Maldives and Mauritius are being strengthened, and the facilities in India’s own Andaman and Nicobar Islands are being rapidly developed.
India is perforce self-reliant in matters of strategic security, with steady support only from Russia and Israel amongst the leading military powers. All the others have axes to grind as India rises. However, it does enjoy a lot of diplomatic support from a large number of countries. India is working on building trade corridors through multiple nations in West Asia all the way to Europe, as well as via Iran and Central Asia to Russia. Many of these Indian initiatives rival China’s Belt and Road programmes and efforts to gird the world in a new connective route.
While the ASEAN region has cordial relations with India, it is closer in some ways to China. The Philippines, however, has drawn closer to India to combat Chinese hegemony.
America is expected to be just behind India at some $51.5 trillion in 2075. All other countries are projected to be far behind these big three.
India’s per capita income, presently at $2,200 odd, is a major bugbear because of India’s rising population till 2050. It has certainly doubled in the last 10 years, and it grew by 9.2 per cent in 2023. But per capita can only be high in countries with small populations.
In the interim, more and more of the Global South, the African Union, and South America, as well as the developed powers, are lining up to do business with India. The recent Free Trade Agreement (FTA) with Britain about to be operationalised is a case in point. An interim trade agreement with the United States is also imminent. The EU is working on an FTA too.
India is beginning to be recognised for doing things differently, both in war and peace, as well as in its use of innovation and technology. Its purchasing power parity already places it as the number 3 economy for a long time now. Its pride of place in the G21 gives it a distinct advantage over expensive, inflationary, and low-growth countries of the G7 going forward.
The writer is a Delhi-based political commentator. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.
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