With more than 75% addition to global growth in output and consumption Developing economies have without any doubt emerged as economic powerhouses, one of them being India. As of today, India is at the 5th position on countries with the fastest economic growth.
We all have somewhere listened to the slogan, ‘Superpower by 2020’ which may be accurate as currently, India has one of the busiest global trade policies and investments with other countries, distinctively China and Bhutan. India is the only trillion-dollar economy to rank among the top five fastest growing economies in the world. The $2 trillion economy is expected to clock an average annual growth of 7.73% during 2017-19, backed by resolute macro economic basics, booming domestic demand, benign demographics, abundant assets and an ardent government.
As of yet, the Modi-led government has begun more than 30 big reforms, breaking the era of policy paralysis, locating new trends, and boosting investor confidence that has made India a land of favourable opportunities for investors and is suitably referred to as the bright spot opposite to a backdrop of the subdued global economy.
Although, the country has to overcome a lot of economic, social, andpolitical problems before it can be considered a superpower. It is also notyet as dominating on the international stage when compared to the UnitedStates or the former Soviet Union.A very large number of India’spopulation, about 50%, is below the age group of 24. This provides the nation with a large workforce for manydecades, helping in its growth.The government is training a 400 million-workforce, which is larger than thePopulation of the United States and Brazil combined. In the coming decades, while some of the strong nations willwitness a decrease in workforce numbers, India is expected to have an increase.
Today, the Indian Army isthe world’s third largest army after United States Army and ChinesePeople’s Liberation Army and the Indian Air Force is the fourth largest air force in theworld with The Indian Navy as the world’s fifth largest navy.
Can India continue its growth emergence?
Although global growth slowed to around 3.5 percent between 2005 and 2015,in large part a result of the Great Recession, China and India forged ahead. In both countries, money has made all the exception for the relative youth of the Indian Population for recent gains. India’s more favorable demography pushes up the hours worked and productivity components. Those factors have led to India engulfing China in the race to the world’s fastest growing economy.
It is paramount to note that every major country in the world – except the United States– has VAT (value added tax). In India, VAT was introduced in April 2005. VAT is not just a replacement of conventional sales tax regime. It is a change in business strategies. It has influenced every walk of life in business models. Whether the existence of VAT in our country is good or bad for the economy of India, that is for another debate but we can say that the concept of VAT is not totally new to India as the Centre previously had introduced a VAT system for about last twenty years in respect of Central Excise duties that helped India to in forminga strong ground against big Global economies.
Despite obstacles, India is already on the road to developing asingle marketplace.
India is home to 1.34 billion people – 18% of the world’s population. It will have overtakenChina as the world’s most populous country by 2024 as previously mentioned. Although, opportunities for corruption have already been created by the confusing patchwork of taxesacross India’s 29 states thathas also caused delayin goods cross state borders. In July 2017, thesystem changed: a new goods and services tax was proposed means the 29 states are now a commonmarket.In Nov 2016, Prime Minister Modiunexpectedly declared that India’s highest-denominationbanknotes – accounting for 86% of cash – would no longer be legal tender. Instead they hadto be deposited in banks. The aim was to punish tax evaders, as those with astash of ‘black money’ would face cumbersomeinquiries. Unusually, nevertheless, almost allbanknotes were transferred.Disruption caused by the Demonetization may have dabbled GDP growth in the short-term, but itcould also determined to have long-term benefits. It has elevated the number of digital transactionsbeing conducted within India’s economy, which are easier to track and to tax: since April, overtwice as many Indians have filed tax returns than in the same period last year.
But growth needs to be more inclusive as India was ranked a disappointing 60th among the 79 developingeconomies assessed in the World Economic Forum’s latest Inclusive Development Index.This is reflected in growing inequality: India’s richest 1% own 53% of its wealth, up from36.8% in 2000. For comparison, the richest 1% in the United States own 37.3% of its wealth.It is also a turbulent time for the tech market too as Several leading companies in India’s IT sector arereportedly planning serious layoffs, inpart due to involvement that the Trump administration’s suppressed on H-1B visas will make ittough to do business in the US. Within a few years, up to half of the 3.9 million Indians currentlyworking in the IT sector will become unimportant.
The Indian economy grew at 7.7 per cent in fourth quarter (Q4) FY 2017-18, as per the Provisional Estimate of National Income by Central Statistics Office (CSO).India’s Wholesale Price Index (WPI) inflation index increased by 1.1 per cent to 119.2in June 2018 compared to 117.9 in May 2018.India’s Consumer Price Index (CPI) inflation rate increased to 4.58 per cent in May 2018 as compared to 4.58 percent in April 2018 which has helped India to tackle the global economical problems such as Health Crises, Poverty,Economic Exclusion in the Middle East, etc.
The growth in Indian Economy has always been affected by Inflation. By inflation we mean a general rise in prices. In India, in recent years, 2010-11, 2011-12 and 2012-13, rate of inflation as measured byconsumer price index (CPI) has been in doubledigit figures.In order to understand more about the definition of Inflation, let us assume that the government adopts expansionary fiscalpolicy by increasing its expenditureon education, health, defence and finances.Thisextra expenditure by borrowing from ReserveBank of India prints new notes for thisPurpose. This will lead to increase in aggregatedemand.If aggregate supply of output does not increaseor increases by a relatively less amount in theshort run, this will cause demand-supplyimbalances which will lead to demand-pullinflation in the economy, that is, general rise inprice level.Note that in developing countries such as India,there are difficulties of measuring employment,unemployment and full employment. Thereforein the Indian context, instead of fullemploymentlevel of output, we use full capacityoutput of the economy.
Significance of Indian Companies, Major Brands and their Effect in Global Economy-
Indian companies are still in the initialphases of experimenting with US capital markets. The Indian companies issuing shares to overseas depository for issuing ADRs (American Depositary Receipts) are allowed to invest funds abroad for a temporary period pending restoration to India. In advancement, the companies may also cling to abroad funds raised through ADRs, for any period to meet their imminent forex (foreign exchange market) requirements.The oil and gas industry remains adominant force in the world economy, even though the brand values of oil and gas companies don’t rank very highly.
India’s insufficiency in having world’s most powerful companies also has a major effect in its economy, the reason being that India lacks in the category of market capitalization which is the measure of the company due to its value and brand power. In this factor Chinese companies are very quicklyacquiring value and authority, the major company being China National Petroleum that has more than US$500 billion just by sales revenue because it is an oil and gas company. India also lacks in creating world’s most powerful brands as there are no major brand/companies in India that can be counted in World’s top 10 dominantbrand/companies irrespective of what category they belong.
But on the bright side, it has been confirmed that in 2020s India will overtake Germany to become the fourth largest economy, trailing only the United States, China and Japan. But unfortunately for India, some of its largest states are also its poorest.India as a whole won’t reach middle-income status until it unites its poorer states into the same Incredible India economy as the rest of the country.