India’s economy current trend overview
India has now recovered from the COVID-19 hit on the economy.
Higher-than-expected 7.2% GDP growth last year.
Expecting an uninterrupted 6.5%-7% growth for a decade, even if no further reforms are undertaken.
According to Chief Economic Advisor (CEA), India could now grow for a longer period of seven to 15 years as China did between 1979 and 2008 without “running into overheating problems” as it did after three-four years of strong growth in recent decades.
India’s progress
A strong momentum
Better macro fundamentals with inflation and trade deficits easing in recent months.
Cleaner bank and corporate balance sheets.
Bolstered by reforms such as Goods and Services Tax (GST) and digitisation that are spurring formalisation.
Challenges
Sectors such as steel and cement seeing higher capacities in action, sections of industry may well start loosening the purse strings soon but a broad-based revival may take longer and needs more actions to buttress the confidence-building.
The economy grew just 3.9% in 2019-20 from 6.5% in the year before, and the quality of the recovery thus far remains uneven.
Unless private investment recovers firmly and revs up job creation for millions of youth, demand growth shall not sustain enough to create the virtuous cycle the government is betting on.
If India wants to encash the world’s China-plus-one supply chain quest, that intent is not often matched by actions.
Misadventures such as high import tariffs and the complex ‘angel tax’ on inbound investments apart, even failing to fix an online service to register a new company does not engender investor confidence.
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