India may be the third largest economy after 2030
Time and again, economic crystal-gazers have made numerous predictions about India’s rising influence in the global economy. Currently, India is considered among the few bright spots in an uncertain global environment. However, if a recent report by a UK think-tank is anything to go by, India may even emerge as the third largest economy after 2030. Yes, in the coming 15 years, the country is likely to topple developed economies like Britain, France, and Italy to enter the coveted league of ‘Top three global economies’.
Let us examine the factors that could prompt this upswing; also, the reasons that could prevent the country from achieving the ambitious number.
The report: India could leapfrog Japan to become the world third largest economy after 2030, according to a report by UK-based Centre for Economics Business and Research (CEBR). The country will be positioned just behind China and the US, the present economic giants. India’s Gross Domestic Product (GDP)—the value of goods and services a country produces—is projected to grow strength to strength, from $1,816 billion in 2015 to $10,133 billion in 2030, states the latest edition of CEBR’s World Economic League Table (WELT) for 2016. In 2031, the country’s GDP could touch a stunning $10,629 billion. The report also adds that “India is now starting to catch up with China and will eventually overtake in the second half of the century”.
This is not the first time, such a prediction has been made. In the last one year, agencies like PricewaterhouseCoopers (PwC), the US Department of Agriculture and the Economist Intelligence Unit have predicted that by 2030, a shift in the world economic order looks inevitable as India and China would emerge as the next economic powerhouses. “In many ways, it is a return to the pre-Industrial Revolution era when China and India dominated world GDP in large due to their great populations, and relatively efficient agricultural sectors at that time”, PWC stated in its report last year.
What works for India: A slowdown in Eurozone and oil & commodities-based economies (due to a slump in oil prices) would help India move up the rankings. Moreover, economists unanimously agree that India’s demographics will provide a leg-up to the country’s economic prospects. With 356 million 10-24 year-olds, India has the world’s largest youth population, according to the United Nations. Moreover, a strong domestic market and limited dependence of exports portend well for the country.
What goes against India: While CEBR expects India to become the largest economy in the Commonwealth in 2019, surpassing the British economy, many problems persist. There is still a long way to go. For one, Asia third largest economy will require a long-term, sustained period of high growth to transform its economy. To achieve this, India needs to highly emphasize on structural reforms in areas of education, infrastructure, healthcare and women’s safety. Furthermore, to optimally utilize its ‘demographic dividend’, the country needs to create a whopping 2 crore jobs a year for its young population. India needs to do more to maintain political stability and rule of law, eradicate wide scale corruption and bridge the widening income inequality, according to PWC. Increased investment in infrastructure and ease of doing business is vital to becoming a trillion dollar economy.