India beats France!

No, it’s not about football. France holds 7th position in FIFA World ranking, and is likely to climb up substantially by end of the week when the World Cup gets over. India ranks 97th, and there is no competition!

However with all the action going on in the media around Football – in Russia as well as Thailand, we are likely to overlook some important news about the economy and people.

World Bank’s Global Economic Prospects Report

According to the report published recently, India has surpassed France to be ranked as the world’s sixth largest economy. India’s GDP, by the end of 2017, stood at US$ 2.597 trillion compared to France’s US$ 2.582 trillion. The U.S., China, Japan, Germany and the U.K. are still ahead of India. It is projected that by 2032 India will overtake the later three countries and become the third largest economy.

Pause, however, before starting the chest-thumping about India becoming a superpower. India is amongst the largest economies because it is highly populous. When the almost-alike GDP of France and India is distributed over 67 million Frenchmen and women, as against 1.34 billion Indians, we know the real strength of the economy. France continues to be 20 times richer than India, and will remain so for a long time to come.

GDP ranking is symbolic; what is important is the trend. Some disruptive policy changes happened in the economy during the last two years. In November 2016, we saw demonetization, and July 2017, introduction of GST (Goods & Services Tax). For a while, it looked like these path-breaking reforms are likely to derail India’s growth story. However, it seems we are back on the track.

To quote from the World Bank Report:

India’s growth bottomed out in the middle of 2017 after slowing for five consecutive quarters and has since improved significantly, with momentum carrying over into 2018 on the back of a recovery in investment. … The temporary disruptions caused by the implementation of the Goods and Services Tax dissipated by mid-2017 and manufacturing output and industrial production have continued to firm since then.

The World Bank expects the GDP growth to continue at 7.3% in 2018, and 7.5% in 2019 and 2020.

India’s economy (today) is robust, resilient and has the potential to deliver sustained growth,

Ayhan Kose, Director of the Development Prospects Group at the World Bank.

The other side of the coin

A person living on less than 1.90 US$ a day is considered to be “extremely poor”. The threshold captures those who struggle to obtain even basic necessities such as food, shelter and clothing, and takes into account differences in purchasing power between countries. India, again being a highly populous country, for decades got the dubious reputation of being – home to the highest number of poor people in the world.

Not anymore! According to a report of Brooking Institution based on the World Poverty Clock, the number of extreme poor in India drops by 44 every minute. While this remains a remarkable achievement, we must not forget that India’s extreme poor still make up for more than the whole population of France.

Keeping the pace of economic growth with the focus on SMEs and Start-ups, skills development and job creation, and reducing agrarian distress, we should aim at lifting more and more of our countrymen out of poverty.

Growth and equitable distribution may work at loggerheads at times. But India must do her balancing act right in order to achieve both the objectives, and hit the goal!

Not the increasing number of rich, but the falling number of poor in a country makes her stronger, more equitable, and fairer.