The golden era of Indian economy

The Border Security Force Camel Band parades on Republic Day at Rajpath, New Delhi, India, Jan. 26, 2015. (Wikimedia Commons)
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Updated 25 January 2023
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The golden era of Indian economy

  • The India of 2023 is very different from the India of 1947, and the India of 2047 will be different from the India of 2023
  • There is certainly much that is uncertain in the world, but there is also much of which we can be certain; within that band of certainty, it is impossible to dispute India’s inexorable economic rise

India recently celebrated 75 years of independence. The idea of “Amrit Kaal” builds on this with a road map for the next 25 years, taking us to 2047 when India will celebrate 100 years of independence.

The India of 2023 is, of course, very different from the India of 1947, and the India of 2047 in turn will be different from the India of 2023 in ways few can anticipate and project; if one casts one’s mind back, how many would have guessed the changes wrought in India over the past 25 years?

The world is an uncertain place, and in the long term even more so. While the future is always uncertain, the current state of the world has been permeated with an additional dose of uncertainty as a result of factors such as the COVID-19 pandemic, geopolitical tensions, the collapse of the multilateral system and regionalism, the retreat of advanced countries from globalization, and the dreaded warnings of “recession” in some of those countries.

These are external shocks that have been thrust on India, as they have on many emerging market economies, and underline the collapse of institutions that provide global public good, the Bretton Woods institutions included.

Global governance has yet to accept the rise of economies such as India. Lord Keynes is often quoted, usually out of context, as sharing the cliche: “In the long run we are all dead.” If one reads the complete text (“The Tract on Monetary Reform,” 1923), one will find his intention was not quite what this out-of-context quote might convey.

There is certainly much that is uncertain in the world, at present and for the long term. But there is also much of which we can be certain. Within that band of certainty, it is impossible to dispute India’s inexorable economic rise.

Much was made of the Goldman Sachs report “Dreaming with BRICS: The path to 2050,” when it was published in 2003. BRICS refers to the leading emerging economies of Brazil, Russia, India, China and South Africa.

It predicted an average real rate of gross domestic product growth in India of about 5.5 percent, with the rise in aggregate GDP and per capita GDP by 2050 explained by the nature of the exponential function.

The report did not include a projected figure for 2047 specifically but did give one for 2045: It predicted that India’s aggregate GDP would be $18.8 trillion, with per capita GDP of just over $12,000.

None of the reasons behind these optimistic projections have been nullified by the current global uncertainty — increase in savings/investment rates as a result of demographic transition and income growth, growth drivers in more efficient land, labor and capital markets and productivity enhancement.

To use an economist’s expression, India is still within the production possibility frontier, not on it. To put it another way, aggregate growth for India is a summation of growth in states, and states are within their respective frontiers, providing plenty of endogenous slack for growth.

Had events in the external world been more benign, India might have grown at 9 percent. Typically, one tends to extrapolate the gloominess of the present into the future. It is by no means obvious that global conditions will continue to be difficult for the next 25 years. But even if that were to be the case, India still might not grow at 9 percent. What growth rate seems reasonable, therefore?

The answer depends on the person making the projection and the assumptions that are made. A nominal figure depends on assumptions about inflation, which is why projections are often presented in real terms, in today’s dollars. A dollar figure also depends on assumptions about the dollar/rupee exchange rate, which is why projections are often based on the current exchange rate (the Goldman Sachs report assumed appreciation of the rupee vis-a-vis the dollar.) A prediction based on purchasing power parity is, naturally, different.

With inflation and exchange rate fluctuations out of the way, then, what trajectory of real growth in India sounds reasonable? The pessimistic forecaster will point to domestic inefficiencies and the state of the wider world and opt for 5.5 percent. The optimistic forecaster will point to empowerment through easier living and the provision of basic necessities, greater ease of doing business, supply-side reforms, and the government’s capital expenditure and opt for 7.5 percent.

That is the rough range of growth to consider, with recognition that as an economy grows, growth rates slow. As one moves up the development ladder, it becomes more difficult to grow as quickly, with the caveat that different states are at different levels of development and so there is plenty of slack.

To return to long-term uncertainty, one can plug in one’s own assumptions about real growth, say something like 6.5 percent, midway between the extremes of 5.5 percent and 7.5 percent. Based on that, India’s per capita income in 2047 would be something like $10,000 and the total size of the economy will approach $20 trillion.

These figures are broadly in the same range as the Goldman Sachs predictions, in which the role of exchange rate appreciation was relatively greater. In such projections, the role of real growth is relatively more.

If reforms succeed in driving economic growth higher than 6.5 percent — and such a “citius, altius, fortius” (faster, higher, stronger) possibility cannot be ruled out — the corresponding numbers will be higher.

Even with the relatively conservative figures, however, India would be the third-largest economy in the world, after the US and China, and this will naturally be reflected in India’s global clout. In a purchasing power parity ranking, India would be second-largest after China.

India’s annual rate of population growth has slowed and is now less than 1 percent. Nevertheless, in 2047, it will be the most populous country in the world, with a population of about 1.6 billion.

Expressions such as “developed country” are rarely used these days and the term no longer has a specific definition. The World Bank instead uses terms such as “middle-income.” India is currently classified as a lower-middle-income economy. By 2047, it will have moved to upper-middle-income classification.

When a country approaches a per capita income of $13,000, its status shifts to high-income. That will be when India can be said to be “developed.” In 2047, India will still fall short of this but the face of poverty in the country, as we know it, will have been completely transformed.

The measurement of poverty is based on the notion of a “poverty line” and, by using a multi-dimensional poverty index, the UN Development Program recently documented a sharp drop in the number of people in India categorized as “poor.”

As economies develop, the position of a poverty line of course shifts upward, beyond merely a subsistence level of consumption. Officially, however, the poverty line that continues to be used in India is still the Tendulkar poverty line. Unfortunately, consumption expenditure data, which is used to measure poverty, does not exist beyond 2011/12. Therefore different analysts now use different assumptions to measure poverty.

If, for example, one uses periodic labor force survey data and the Tendulkar poverty line, the poverty ratio (the percentage of the population below the poverty line) is currently about 17 percent. By 2047, it is forecast that this will have fallen to about 5 percent.

Sustainable Development Goal reports, among other analyses, have documented pockets of deprivation in specific geographical regions, which have been targeted by the government through its Aspirational Districts Program. India is a heterogeneous society and so despite the provision of basic necessities — such as physical and social infrastructure, financial inclusion, access to markets, technology and digital access — and an overall message of empowerment, there will continue to be pockets of poverty in the country, even in 2047.

But the nature of that poverty will be very different compared with today. India will have achieved universal literacy, or be pretty close to it. UNDP uses the Human Development Index, an aggregate measure, to gauge the development of people beyond poverty ratios. Currently, India is in the medium category of human development, based on HDI. By 2047, it will rank in the high category of human development.

There are five transitions underway and these will be even more pronounced by 2047. Firstly, there is a rural-to-urban shift, and urbanization correlates with development. By 2047, almost 60 percent of India’s population will be urbanized. It is predicted that Delhi and Kolkata will have populations of about 35 million, and Mumbai more than 40 million. The mind boggles at such figures and government programs are being developed with the aim of ensuring urbanization is better managed.

Secondly, there will be greater formalization of the economy. Such formalization is another factor that correlates with growth and development. Employees will have formal job contracts. Micro, small and medium enterprises will be legally registered. Indian companies will become larger, more efficient, and fully integrated into global supply chains.

Thirdly, the percentage of the population that earns a living from agriculture will decline. Agriculture’s share in gross domestic product will decline to something like 5 percent, and the percentage of the population earning a living from agriculture will not be more than 20 percent. Fourthly, there will be a shift in agriculture toward commercialization, diversification and larger farms.

Fifthly, there will be greater participation of citizens in governance, in keeping with the theme of “sabka prayas” (everyone’s effort). For years, there was a colonial chip on the nation’s shoulder. But present-day India is a proud India, a resilient India, an aspiring India. Amrit Kaal reflects that, and the country is making great strides on economic fronts, with greater confidence and entrepreneurship.

  • Bibek Debroy is the chairman of the Economic Advisory Council to the Prime Minister in the Government of India.

India in mourning after over 240 killed in deadliest aviation disaster in decades

Updated 13 June 2025
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India in mourning after over 240 killed in deadliest aviation disaster in decades

  • Sole flight survivor Ramesh Viswashkumar a British national of Indian origin, is being treated at a hospital, airline confirms
  • London-bound Dreamliner with 242 people on board also killed dozens more when it crashed into a medical college hostel

NEW DELHI, India: Indian authorities were combing the site of one of India’s deadliest aviation disasters on Friday, after an Air India plane crashed in the western city of Ahmedabad less than a minute after takeoff, killing all but one of its passengers. 

The London-bound Boeing 787-8 Dreamliner, which had 242 people on board, also killed dozens more people when it crashed into a medical college hostel located just outside Ahmedabad airport and burst into flames on Thursday afternoon. 

The sole survivor, a British national of Indian origin, is being treated in a hospital, the airline confirmed. 

“We are all devastated by the air tragedy in Ahmedabad. The loss of so many lives in such a sudden and heartbreaking manner is beyond words. Condolences to all the bereaved families,” Indian Prime Minister Narendra Modi wrote on social media after visiting the crash site in the capital of his home state of Gujarat. 

The passengers comprised 169 Indian nationals, 53 Britons, 7 Portuguese and one Canadian. 

The surviving passenger, who was in seat 11A next to an emergency exit in front of the plane’s wing, reportedly managed to jump out. He told Indian media that he had heard a loud noise shortly after flight AI171 took off. 

Various footage showed the plane taking off over a residential area and then sinking and disappearing from the screen, before a huge fireball could be seen rising into the sky from beyond the houses. 

Those killed on board include a family who was visiting India for Eid, a newlywed who is moving to the UK and Vijay Rupani, former chief minister of Gujarat. 

Health authorities are conducting DNA tests to identify bodies, which were mostly charred beyond recognition, as relatives take part and wait for officials to release the remains. 

Suresh Khatika, who was waiting at the Ahmedabad Civil Hospital where the DNA testing was taking place, said his niece Payal Khatika was among the passengers. 

“Payal was going for further studies and she has taken a loan for it. She was really preparing herself for the day when she would go to the UK for studies,” Khatika told Arab News. 

“It is really tragic that her dream crashed like this. We are in deep pain, and don’t know how to react.” 

Many Indians have also taken to social media to mourn the victims, as their stories circulated widely. Among them is Dr. Pratik Joshi, who was reportedly bringing his wife, Dr. Komi Vyas, and three young children to move to the UK. A picture of the family, believed to be taken on the plane and shared with relatives before takeoff, has garnered millions of views online as messages of condolence poured in. 

In addition to the passengers and crew, dozens more people perished as they were caught in the path of the plane crash. 

Thakur Ravi, a cook at B.J. Medical College, said his mother and two-year-old daughter, who had been on the side of the building where the plane had crashed, were missing. 

“Other helpers and cooks managed to escape but my mother and daughter have been missing since yesterday,” Ravi told Arab News. 

“We are frantically hoping against hope to have my family back. It was a horrible incident. It seemed as if the sky had fallen on us.” 

Indian Civil Aviation Minister Ram Mohan Naidu said a formal investigation headed by the Aircraft Accident Investigation Bureau has been launched. 

Boeing said it was in touch with Air India and stood “ready to support them” over the incident. The UK and US air accident investigation agencies also announced they were sending teams to support their Indian counterparts.

India, the world’s third-largest aviation market, has endured several fatal air crashes on its soil, including in 1996, when two planes collided mid-air over New Delhi, killing around 350 people. In 2010, an Air-India Express jet crashed and burst into flames at Mangalore airport in south-west India, killing 158 of the 166 passengers and crew onboard. 


Judge blocks Trump’s election executive order, siding with Democrats who called it overreach

Updated 13 June 2025
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Judge blocks Trump’s election executive order, siding with Democrats who called it overreach

ATLANTA: A federal judge on Friday blocked President Donald Trump’s attempt to overhaul elections in the US, siding with a group of Democratic state attorneys general who challenged the effort as unconstitutional.
The Republican president’s March 25 executive order sought to compel officials to require documentary proof of citizenship for everyone registering to vote for federal elections, accept only mailed ballots received by Election Day and condition federal election grant funding on states adhering to the new ballot deadline.
The group of attorneys general said the directive “usurps the States’ constitutional power and seeks to amend election law by fiat.” The White House has defended the order as “standing up for free, fair and honest elections” and called proof of citizenship a “commonsense” requirement.


Hong Kong rights group shuts down after years of advocating for workers

Updated 13 June 2025
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Hong Kong rights group shuts down after years of advocating for workers

  • Founded in 1994, organization maintained a database tracking workers’ strikes, protests, workplace accidents and other labor rights incidents in China

HONG KONG: A Hong Kong group that advocated for workers rights for decades announced its shutdown abruptly on Thursday, citing financial difficulties and debt issues.
China Labor Bulletin planned to stop updating its website content and appeared to have deleted Facebook and Instagram social media accounts used by the nonprofit rights organization.
“The company can no longer maintain operations and has decided to dissolve and initiate the relevant procedures,” it said in a statement on an archived web page Friday.
Founded in 1994, organization maintained a database tracking workers’ strikes, protests, workplace accidents and other labor rights incidents in China.
As dozens of civil society groups disbanded or left Hong Kong in the wake of the 2020 Beijing-imposed national security law, China Labor Bulletin continued providing valuable resources for journalists and academics in the southern Chinese city.
Critics say the drastic political changes in Hong Kong indicated the decline of Western-style civil liberties that China promised to keep intact when the former British colony returned to Chinese rule in 1997. However, Beijing and Hong Kong governments insisted the law was crucial to bring stability to the city following massive anti-government protests in 2019.
China Labor Bulletin’s founder Han Dongfang, a former railway worker who participated in the 1989 Tiananmen Square protests, did not immediately respond to a request for comment from The Associated Press. He told the Central News Agency of Taiwan that the shutdown was his decision and he would stay in Hong Kong.
Han’s decision appeared sudden to many Hong Kong civil society observers. Three weeks ago, he wrote on social media platform LinkedIn about his work anniversary and his team’s progress.
“Let’s keep our faith up at this abnormal time and continue our important work,” he said.


India in mourning after deadliest aviation disaster in decades

Updated 13 June 2025
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India in mourning after deadliest aviation disaster in decades

  • Sole flight survivor, a British citizen of Indian origin, is being treated in hospital
  • Family members provide DNA samples to help identify crash victims

NEW DELHI: Indian authorities were combing the site of one of India’s deadliest aviation disasters on Friday, after an Air India plane crashed in the western city of Ahmedabad less than a minute after takeoff, killing all but one of its passengers.

The London-bound Boeing 787-8 Dreamliner, which had 242 people on board, killed dozens more people when it crashed into a medical college hostel just outside Ahmedabad airport and burst into flames on Thursday afternoon.

The sole survivor, a British citizen of Indian origin, is being treated in hospital, the airline confirmed.

“We are all devastated by the air tragedy in Ahmedabad. The loss of so many lives in such a sudden and heartbreaking manner is beyond words. Condolences to all the bereaved families,” Indian Prime Minister Narendra Modi wrote on social media after visiting the crash site in the capital of his home state of Gujarat.

The passengers comprised 169 Indian citizens, 53 Britons, 7 Portuguese and a Canadian.

The surviving passenger, who was in seat 11A next to an emergency exit in front of the plane’s wing, reportedly managed to jump out. He told Indian media that he had heard a loud noise shortly after flight AI171 took off.

Various footage showed the plane taking off over a residential area and then sinking and disappearing from the screen, before a huge fireball could be seen rising into the sky from beyond the houses.

Those killed on board include a family visiting India for Eid, a newlywed who was moving to the UK and Vijay Rupani, former chief minister of Gujarat.

Health authorities are conducting DNA tests to identify bodies, most of which were charred beyond recognition.

Suresh Khatika, who was waiting at the Ahmedabad Civil Hospital where the DNA testing was taking place, said his niece Payal Khatika was among the passengers.

“Payal was going for further studies and she has taken a loan for it. She was really preparing herself for the day when she would go to the UK for studies,” Khatika told Arab News.

“It is really tragic that her dream crashed like this. We are in deep pain, and don’t know how to react.”

Many Indians have taken to social media to mourn the victims, as their stories circulated widely. Among them is Dr. Pratik Joshi, who was reportedly bringing his wife, Dr. Komi Vyas, and three young children to move to the UK. A picture of the family, believed to be taken on the plane and shared with relatives before takeoff, has garnered millions of views online as messages of condolence poured in.

In addition to the passengers and crew, dozens more people caught in the path of the plane crash perished.

Thakur Ravi, a cook at B.J. Medical College, said his mother and 2-year-old daughter, who were on the side of the building where the plane crashed, were missing. 

“Other helpers and cooks managed to escape but my mother and daughter have been missing since yesterday,” Ravi told Arab News.

“We are frantically hoping against hope to have my family back. It was a horrible incident. It seemed as if the sky had fallen on us.”

India’s Civil Aviation Minister Ram Mohan Naidu said a formal investigation led by the Aircraft Accident Investigation Bureau has been launched.

Boeing said it was in touch with Air India and stood “ready to support them” over the incident. The UK and US air accident investigation agencies also announced they were sending teams to support their Indian counterparts.

India, the world’s third-largest aviation market, has suffered several fatal air crashes on its soil, including in 1996, when two planes collided in mid-air over New Delhi, killing about 350 people. In 2010, an Air-India Express jet crashed and burst into flames at Mangalore airport in south-west India, killing 158 of the 166 passengers and crew onboard.


Japan’s foreign minister praises Djibouti’s work on maritime security

Updated 13 June 2025
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Japan’s foreign minister praises Djibouti’s work on maritime security

TOKYO: Japanese foreign minister Takeshi Iwaya met with Dileita Mohamed Dileita, President of the National Assembly of the Republic of Djibouti, on Friday and praised the “deepening of cooperation between the two countries in the field of maritime security.”

Iwaya stated that Djibouti, located at the southern end of the Red Sea and an important sea lane linking Europe and Asia, is a strategically important partner in the quest for a “Free and Open Indo-Pacific (FOIP).”

Referring to the good relations between the two countries and his own special attachment toward Japan, President Dileita expressed his appreciation and gratitude for Japan’s development cooperation in various fields and for the Self-Defense Force facility in Djibouti, noting the strategic importance of his country.

The two sides exchanged views on issues that included the regional situation in Africa and in East Asia and agreed to further strengthening bilateral relations and cooperation in regional and international arena, with a view to TICAD 9 in August and Expo 2025 Osaka, Kansai, Japan.

• This article originally appeared on Arab News Japan