As India rises
As growing economies are vastly influenced by the latest waves in the market, India is among the countries that feel pressure from various angles. On a different note, Indian economy is recently basking in the pride of climbing another step in the world ranking. India, leaving behind the Russian, Italian and Brazilian economies, with the growth it achieved – and updated – in recent years, has, according to World Bank statistics, passed France as of 2017 and positioned itself in the sixth place in current size in dollars. As a matter of fact, according to certain estimates for this year, it will likely swing past the U.K. and rise to fifth place.
Hence, history is sort of turning back. It appears that Indian economy, which fell behind European countries like the U.K. in the early 20th century, and France and Italy in the mid-20th century, is retaking the ranks it lost. Of course, those years in which the country progressed step by step toward independence carries the accretion of a long story of decline in the economy. Thus, we know that India, whose share from the world’s economy back then had dropped to single-digit figures, had a long-standing double-digit share prior to that.
The colonial history responsible for the course in question aside, the spurts made in recent years by this giant Asian economy, which has been trying to recover within the frame of various plans in different periods after independence, are striking. India, one of the countries displaying the world’s most spectacular gross domestic product (gdp) development – even though it may have slightly slowed down – in recent years, recorded a growth of 7.1 percent in 2016, 6.6 percent in 2017, and pushed the gear up in the first quarter of 2018 to 7.7 percent. It is possible to say that increased investments in the country have had a role in this acceleration.
India, which appears to have shown positive performance in various macro indicators in this context, needs to pay attention to and work on dynamics such as the budget deficit that exceeds goals, companies’ debt and problematic loans. Also, based on the global concerns I mentioned in the beginning, the Fed policy, oil prices and trade wars are the primary problems that closely concern the country’s economy – especially in the short term.
Meanwhile, welfare, which is one of the main outputs of the economic development shaped by all these details, is the most fundamental matter that needs to be mentioned at this point. Thus, India, despite stepping up to sixth place in economic size in world ranking and making a strong impression among rising economies, is in an almost upside-down list in income per capita. The said gdp per capita that was $1,940 in 2017, ranks roughly among the last 50 on the world scale, displaying a personal income level equal to that of Nigeria, which ranks 30th in economic size.
Though, of course, it is on a relatively good state on the gdp per capita list that is prepared based on the purchasing power parity (ppp). Based on this calculation, while the average income in India corresponds to $7,056 as of 2017, we are talking about a level that quite surpasses African countries, but is yet still considerably behind average-income rising countries like China, Brazil and South Africa. In this context, the country still needs to make quite a bit of progress in terms of the poverty issue that has been declining for almost a decade. According to the latest estimates, India, where 73 million people suffer from extreme poverty, wants to continue on its way with a growth rate in the 7-8 percent band to completely overcome this problem. While the inequality seen in income between industries is also a major aspect of the problem, as the general elections to take place in 2019 approach, the economy is going to become an increasingly hot topic in the country.
As India rises
Süleyman Seyfi Öğün
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