India to overtake Japan as Asia's second-largest economy by 2030 - Says IHS Markit

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As per IHS Markit, India is projected to surpass Japan as Asia second-largest economy by the year 2030.

The report says that India’s GDP, as per the projections, will be the world’s third-largest by 2030 only after US and China. Right now, India’s economy is the sixth-largest in the world after the US, China, Japan, Germany and the UK. The current size of our GDP from 2.7 trillion dollars is expected to reach 8.4 trillion dollars by 2030. Just to give you an idea, China’s nominal GDP in 2020 was about 15.7 trillion dollars.

As for the report, there are multiple positive signs for India that is, India’s large and fast-growing middle class will help increase consumer spending, leading to more consumption and more buying in the market. India’s consumption expenditure is expected to double from 1.5 trillion dollars in 2020 to 3 trillion dollars in 2030. The report says that for the years 2021–22, India’s real GDP growth is projected to be about 8.3%. It is very near to the World Bank projection, which is about 8.3% for India. After that, India’s growth is expected to be 6.7%. The number is lower because with increasing growth, your base increases and thus it becomes extremely difficult to sustain the high growth rate if your base keeps on increasing.

Now, as you would know, there are multiple projections that are made on a specific country by different organizations across the world regarding their growth rate. A few months back, the World Bank also had made a growth prediction for India.

The World Bank had expected India to grow at 8.3% for the fiscal year 2021–22. The report in which this information was given was called South Asia Economic Focus Report, which said that the entire South Asian region would grow by 7.1%. Apart from that, the World Bank also has multiple reports, such as Human Capital Index, World Development Report and the recently discontinued Doing Business Report.

As per the World Bank, the projection of 8.3 would be achieved because of increased public investment in the country through schemes such as production linked incentives, which will boost manufacturing in the country. The World Bank said that the Indian economy’s response in the second wave was much better as compared to the first wave, and the economy did not go down as much. The economic recovery in various sectors of India has been unequal, which is considered as K-shaped recovery where are some sectors they cover better as compared to the other sectors.

While manufacturing and construction sectors have recovered, but low skilled individuals, self-employed people, small firms are still to reach the original pre-pandemic level. The World Bank had said that the pace of India’s vaccination programme will highly determine India’s growth rate. We are discussing this on a day when India has completed 150 crore vaccines, so at least this is a point where India has made drastic improvements. The World Bank had also pointed towards some possible risks in achieving this target, including financial sector stress, the slowdown in the vaccination pace and higher inflation that the government has been warned against.

The report also had some suggestions, such as focusing on medium-term growth, adopting greener policies for environmental conservation and ensuring that the formal sector and women participation in the country is at the centre of government’s policy-making. For the entire South Asian region also, the World Bank had a suggestion that is to reduce the entry barriers, especially in the services sector which the South Asian nation, including India, does not do. It would create more national and international competition and will reduce the chances of a new monopoly emerging in the sector.

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Hi, I am Vishnu, and I have been a blogger for more than 2 years now; and I will provide some knowledgeable current international news to my readers.

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