Tuesday, May 28, 2024
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How India is set to beat China in overall GDP growth sooner than expected

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Shillong, May 9: A robust gross domestic product (GDP) growth, continuous thrust on manufacturing with global giants (like Apple) strengthening their local supply chains, top American corporate honchos praising the overall development under Prime Minister Narendra Modi, and political stability ensure that India is in a position to pip China on most economic parameters faster than expected.

If we look at the economic growth, India’s GDP growth has been exceeding China’s for a few years now.

While India clocked GDP growth at around 7.5 per cent in 2023, China’s growth hovered around 5 per cent. For the first quarter (Q1) this year, China’s GDP grew 5.3 per cent. On a quarter-on-quarter basis, it grew a mere 1.6 per cent.

The International Monetary Fund (IMF) has pegged India’s growth projection to 6.8 per cent this year, an increase of 0.3 per cent over its January update, while China’s GDP growth has been pegged at 4.6 per cent in 2024 and is expected to slow down further to 4.1 per cent in 2025.

The IMF even projects China’s growth declining towards 3.5 per cent in 2028 and estimates that by 2027, India will become the world’s third-largest economy, after the US and China.

On Thursday, Finance Minister Nirmala Sitharaman said that PM Modi’s government will be formed again for a third term and India’s economy will reach third place globally (behind the US and China) from fifth place in the coming year or so – faster than what is being projected. According to the government’s Chief Economic Adviser (CEA) V. Anantha Nageswaran, there is a high possibility of India’s economic growth even touching 8 per cent in 2023-24.

RBI Governor Shaktikanta Das said recently that India’s GDP growth for 2024-25 is projected at 7 per cent – way ahead than China’s growth which is faltering.

The world has also acknowledged India’s growing economic clout.

JPMorgan Chase CEO Jamie Dimon recently praised PM Modi for having “done an unbelievable job” and billionaire investor Warren Buffett said that India holds “unexplored” opportunities for Berkshire Hathaway. Apple CEO Tim Cook called the country “an incredibly exciting market while Tesla and SpaceX CEO Elon Musk look forward to visiting India later this year.

According to IMF data, India’s per capita GDP in 2024 has increased to $2,850 which works out to 42 per cent of the $6,770 for its peer countries. It means that the gap has been narrowed, with India’s economic performance being better than the other emerging economies in the last 10 years.

A decade ago, India was the 10th largest economy, with a GDP of $1.9 trillion.

“This 10-year journey is marked by several reforms, both substantive and incremental, which have significantly contributed to the country’s economic progress,” according to the government. (IANS)

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