“Indian Economy and its Future”

-- Cherlin Flory Thomas,IX-A,Indian Learners Own Academy, Kuwait

India, also known as the Republic of India, a country in south Asia is one of the developing countries of the world. It is the seventh largest country by area, the second most populous country (with over 1.2 billion people), and the most populous democracy in the world. The economy of India is a developing mixed economy. It is the world's sixth largest economy by nominal GDP and the third largest by purchasing power parity (PPP). The country ranks 139th in per capita GDP (nominal) with $2,134 and 122nd in per capita GDP (PPP) with $7,783 as of 2018.

After the 1991 economic liberalization, India achieved 6-7% average GDP growth annually. Since 2014 with the exception of 2017, India's economy has been the world's fastest growing major economy, surpassing China. The long-term growth prospective of the Indian economy is positive due to its young population, corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.

India topped the world bank's growth outlook for the first time in fiscal year 2015–16, during which the economy grew by 7.6%. Despite previous reforms, economic growth is still significantly slowed by bureaucracy, poor infrastructure, and inflexible labor laws. India has one of the fastest growing service sectors in the world with an annual growth rate above 9% since 2001. India has become a major exporter of IT services, business process outsourcing (BPO) services.

This is the fastest-growing part of the economy. The IT industry continues to be the largest private-sector employer in India. India is the third-largest start-up hub in the world with over 3,100 technology start-ups in 2014–15. The agricultural sector is the largest employer in India's economy but contributes to a declining share of its GDP. India ranks second worldwide in farm output. The industry (manufacturing) sector has held a steady share of its economic contribution. The Indian automobile industry is one of the largest in the world. India had $600 billion worth of retail market in 2015 and one of world's fastest growing e-commerce markets.

The Gross Domestic Product (GDP) in India expanded 1.90 percent in the secondquarter of 2018 over the previous quarter. GDP Growth Rate in India averaged 1.68 percent from 1996 until 2018, reaching an all-time high of 5.40 percent in the second quarter of 2009 and a record low of -1.70 percent in the first quarter of 2009. India is the second largest producer of food grains globally.

India houses numerous varieties of cereals and pulses that are largely consumed domestically. However, especially rice like basmati have made a mark in the global markets as well. As per 3rd Advance Estimates, the estimated production of major crops during 2016-17 is as: Food grains – 273.38 million tons, Rice – 109.15 million tons, Wheat – 97.44 million tons, CoarseCereals – 44.39 million tons, Maize – 26.14 million tons, Pulses – 22.40 million tons. India witnesses nearly 5% wastage in cereals majorly due to lack of storage infrastructure and primitive grain handling mechanism.

To reduce this wastage level and fulfill the increasing demand for grains and its processed forms, India needs adequate infrastructure, processing facility and research & development in this area.India's industrial output rose 8.1 percent from a year earlier in October 2018, following a 4.5 percent growth in the previous month and easily beating market expectations of 5.7 percent advance. It was the steepest increase in industrial production since November last year led by strong output expansion for all sectors: manufacturing (7.9 percent vs 4.6 percent in September); mining (7 percent vs 0.1 percent); and electricity (10.8 percent vs 8.2 percent).

In April to October 2018-19, industrial production rose 5.6 percent, compared to 2.5 percent growth in the same period of the previous fiscal year. Industrial Production in India averaged 6.38 percent from 1994 until 2018, reaching an all time high of 19.90 percent in November of 2006 and a record low of -7.20 percent in February of 2009. The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign investment flows, contributed significantly to exports as well as provided large-scale employment. India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community,

Social and personal services, and services associated with construction. The services sector is the key driver of India’s economic growth. The sector has contributed 57.12 per cent of India’s Gross Value Added at current price in H1 2018-19. Net service exports stood at US$ 38.95 billion in H1 2018-19 (P). Nikkei India Services Purchasing Managers' Index (PMI) stood at 53.7 in November 2018. The expansion in November 2018 was marked with boost in output, the strongest since July 2018. Leisure and business travel and tourism spending are expected to increase to Rs 14,127.1 billion (US$ 216.9 billion) and Rs 806.4 billion (US$ 12.4 billion) in 2018, respectively.

India’s earnings from medical tourism could exceed US$ 9 billion by 2020. Indian healthcare companies are entering into merger and acquisitions with domestic and foreign companies to drive growth and gain new markets.India’s rank jumped to 24 in 2018 from 137 in 2014 on World Bank’s Ease of doing business - "Getting Electricity" ranking. Five times more growth in major ports’ traffic between 2014-18, compared to 2010-14. Six-fold increase in Government spending on telecommunications infrastructure and services in the country – from Rs 9,900 crores (US$ 1.41 billion) during 2009-14 to Rs 60,000 crores (US$ 8.55 billion) (actual + planned) during 2014-19. A total of 11 projects worth Rs 824.80 crore (US$ 127.98 million) were sanctioned under the Swadesh Darshan scheme. Highest ever revenue was generated by Indian IT firms at US$ 167 billion in 2017-18. Annual consumer inflation in India declined to 2.33 percent in November of 2018 from an upwardly revised 3.38 percent in October and below market expectations of 2.8 percent. It is the lowest inflation rate since June of 2017 as food prices fell the most since the series began in 2012. The Reserve Bank of India revised down its inflation forecasts to 2.7 percent-3.2 percent for the period Oct 2018-March 2019, amid lower food and fuel prices. Inflation Rate in India averaged 6.37 percent from 2012 until 2018, reaching an all time high of 12.17 percent in November of 2013 and a record low of 1.54 percent in June of 2017. In the last few quarters, Indian Rupee has lost value against the likes of USD but has also gained against other currencies.

There are few signs of a revival in investment demand. Commodity prices have been moving up again, which could offset any improvement in the global economy. The banking system is still in deep trouble. The waiver of farm loans will stretch the resources of the states and the axe may fall on capital expenditure. Nobody knows how badly the informal sector will be affected as a result of the note ban and GST, and the impact on jobs and consumption demand. In short, the recovery is likely to be much less certain and will take time.

Comparison chart of Indian and United States economy:

Budget > revenues, India- 172.10 billion -Ranked 23th, US - $2.45 trillion Ranked 1st. 14 times more than India

Budget surplus > India + or -5% of GDP , US -6.8% of GDP
deficit > Ranked 143th. Ranked 157th. 36% more than India

Debt> Government debt > 49.6 CIA 72.5 CIA
Public debt, share of GDP Ranked 35th. 46% more than India Ranked 64th.

Exports India - 301.90 billion , Ranked 19th. US - $1.56 trillion, Ranked 2nd. 5 times more than India

GDP India - $1.84 trillion , Ranked 11th. USA - $15.68 trillion, Ranked 2nd. 9 times more than India

GDP>Per capita India- $2,625.09 per capita , Ranked 130th. US - $45,759.46 per capita, Ranked 8th. 17 times more than India

GDP> Per capita >PPP India- $3,800.00 , Ranked 132nd. US - $51,700.00, Ranked 6th. 14 times more than India

GDP>Purchasing power India - $3,355.94 , Ranked 126th. US - $47,587.30 parity per capita
Ranked 7th. 14 times more than India

GDP per capita $1,489.24 $49,965.27
Ranked 135th. Ranked 10th. 34 times more than India

Gross National Income $477.00 billion $9.78 trillion
Ranked 12th. Ranked 1st. 21 times more than India

Inflation rate >Consumer prices 9.7% 2.1%
Ranked 25th. 5 times Ranked 160th.more than United
Population below poverty line 29.8% 15.1%
Ranked 19th. 97% more Ranked 34th.than United
Public debt 51.7% of GDP 70% of GDP
Ranked 61st. Ranked 37th. 35% more than India

Unemployment rate 8.5% 8.1%
Ranked 46th. 5% more Ranked 47th.than United States

Therefore, over the short-term the worries are related to bad loans, falling exports etc., but these are temporary issues. A stable government, cheaper commodities, improving healthcare and a robust democracy are big positives. Indian economy has its growth in less rupee value for goods compared to other countries. Goods are affordable to buy in India. GST was introduced in India which helped serve and easy the taxation. Though drop in market, India has managed to survive in its growth as the values are low and affordable and salaries are compensated too. Hence, Indian economy is keeping its way of growth in its own way as it is.

Figure: Comparison of GDP growth in India with other major countries from 2016 - 2019

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