With one of the fastest growing economies and a rapidly growing middle class, India’s future is an interesting one.
India is the sixth largest economy, recently surpassing China on the world’s fastest growing major economy. India’s growth has been increasing exponentially since 2014 when Narendra Modi became Prime Minster and has helped the country grow by at least 7% per year since then. Also, a fast-growing population of the working age is definitely having a positive impact on their economy and fuelling growth. There are 700 million Indians under the age of 35 and the demographics look good for Indian growth in the next twenty years at least. India is also attracting a lot of foreign investment. Main reasons being is that they have a strong legal system and many english-language speakers.
Although India is one of the fastest growing economies with a lot of prospects, the country does have some limitations when it comes to growth and development. One main reason being low productivity and human capital. A high percentage of workers and low-skilled and work in small businesses. This most likely comes down to its quality of education where the country does not rank very high. Another big limitation for India is its high inflation and persistent trade deficit. A big reason for its high inflation is that over the past few years, the rate of increase in money supply has varied between 15 and 18 per cent, whereas the national output has increased at an annual average rate of only 4 per cent. Therfore, the rate of increase in output has not been sufficient to absorb the rising quantity of money in the economy.
We’ve had a look at India’s reasons for growth and limitations, but what does the future of India look like?
In the past couple of years, the startup culture in India has been thoroughly encouraged in India in a big way. By 2020, we should expect to see a lot more Indian start-ups to become billion-dollar companies.
In 2030, India will have a population of around 1.5 billion people which has been predicted to overtake China in 2028 as the world’s largest country. It is said that by then, the country will have three megacities despite the country remaining predominantly rural up to that year. India has been forecasted to be placed among the top five military prowess in 2030 due to its rising population and its “Make in India” movement which will allow India to be self-sufficient in manufacturing defence products.
If things carry on the way they are, by 2050, India will be the second largest economy behind China. Resembling todays Russia and America, India and China would race to the top position in the world. Of course there is no way of knowing what anything will be like in 2050 and this is all just speculation. However, if India carry on the way it’s going, it will become an economic powerhouse and a force to be reckoned with.