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Old 21st January 2019, 13:08   #1
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Default India's economy set to be World's no 5 in 2019

Proud, very proud of my India . We've already overtaken the UK's car market - related thread (Indian car market could soon be the no.4 worldwide; closing in on Germany).

Now, the overall economy will be bigger.
Quote:
India is likely to cross the United Kingdom in the worlds largest economy rankings in 2019, a report published by global consultancy firm PwC stated.

India and France are likely to surpass the UK in the worlds largest economy rankings in 2019, knocking it from fifth to seventh place in the global table, the PwCs Global Economy Watch report said.

PwCs Global Economy Watch monitors trends and issues affecting the global economy and details its latest projections for the leading nations.
Source & Full Article
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Old 21st January 2019, 14:43   #2
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Default re: India's economy set to be World's no 5 in 2019

Indeed! it is a commendable achievement coming in just 70 years of independence. It is worth remembering the appalling state of the country during its independence in 1947 such as in literacy, child mortality, expected life span, economy, and more - it is so bad that many, especially in the west, expected that the nation will collapse. There still is much more to be achieved however, and the important thing is currently we are traveling in the right direction and must stay the course.

The article talks of GDP in nominal terms. On PPP terms, China will be largest economy of the world already and I assume India too will be in the top quartile. This is just one way to slice the data. Another way to see this is through per capita income which is low today albeit growing. Other countries may have smaller GDP but their overall population will be more wealthy and enjoy a higher standard of living due to higher per capita income. Another aspect that is relevant here is the income distribution among the populace. A nation must avoid extreme income inequality and keep the Gini coefficient within reasonable and favorable parameters. In summary, the day India creates a larger GDP economy, provides larger per capita income, and tackles income inequality we can say we have truly arrived.
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Old 21st January 2019, 15:04   #3
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Default re: India's economy set to be World's no 5 in 2019

Read this in the morning papers. The actual PWC report, available here predicts many things, including the possible rise in the quantum of global temperature!

The actual words from the report are quoted below:
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Based on both the IMFs forecasts and our main scenario projections, it is likely to be surpassed by two others in 2019: India and possibly also France. One of these changes may be permanent. India is the fastest growing large economy in the world, with an enormous population, favourable demographics and high catch-up potential due to low initial GDP per head. India is therefore all but certain to continue to rise in the global GDP league table in the coming decades as projected in our latest World in 2050 report.
* emphasis mine.

While I am glad we are moving forward briskly, what gets my goat is the continuing disparity in distribution of income and consequently the increasing gap between the haves and the have nots. Without falling into the trap of ideal socialism, one can argue that unless the nation as a whole sees brighter days, this economic progress is just a mirage.

Interestingly, Deccan Herald cites the Inequality Report: Public Good or Private Wealth by Oxfam as saying that
Quote:
wealth inequality was "on the rise" in India too and it "threatens" the social fabric. "In the last year, the total wealth of India has increased by USD 151 billion (Rs 10,591 billion). Wealth of top 1% increased by 39% whereas wealth of bottom 50% increased a dismal 3%
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The report claimed that India's top 10% of the population holds 77.4% of the total national wealth. The wealth of top nine billionaires is equivalent to the wealth of the bottom 50% of the population.

"The contrast is even sharper for the top 1% that holds 51.53% of the national wealth. The bottom 60%, the majority of the population, own merely 4.8% of the national wealth...High levels of wealth disparity subvert democracy," it said.
More here

I have no affiliations to either PWC or OXFAM, but as a discerning individual, I would take both the reports with a cart load of salt; specially in the election year.
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Old 21st January 2019, 16:46   #4
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Default re: India's economy set to be World's no 5 in 2019

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Originally Posted by murillo View Post
Another way to see this is through per capita income which is low today albeit growing. Other countries may have smaller GDP but their overall population will be more wealthy and enjoy a higher standard of living due to higher per capita income.
Totally agree with you. We should look at per capita income to judge where we stand. Due to huge population, the per capita income comes down drastically. As per World Bank figure, we stand at 138 in 2017

Reference: https://en.wikipedia.org/wiki/List_o...al)_per_capita
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Old 21st January 2019, 21:20   #5
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Default re: India's economy set to be World's no 5 in 2019

Most certainly a proud achievement in 70 years from a divided impoverished land that most geo-political pundits expected to implode into several fractured little states. John Kenneth Galbraith said it best that we are a functioning anarchy. It was as true in the early 1960s when he said this as it is today. What to do we are like that only <grinning & shrugging emoji> . In 2018 and 2017 UK, France and India were more or less tied up at GDPs of US$ 2.8, 2.8 and 2.7 Billion as per IMF numbers. Brexit, France's economic slow down and India's 6%+ growth is what is tipping the scales for 2019. In 1980 we were in 13th place and remained there till 2006 !! Our relative position really started to move only from 2007 (12th) onwards.

In purchasing power parity terms we are number three after USA and China.

On the flip side we have a lot of institutional building to do and civic discipline to inculcate in our citizens. Nation building takes more than a few generations. We sadly don't live long enough to see it all.

With regard to income disparity I have a different set of observations from these reports that are based on numericals. Market value of wealth ignores the true human value of your first pucca house or your first bicycle and does not take into account the diminishing happiness quotient of the 51st million in your portfolio. Just one man's views.
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Old 21st January 2019, 21:31   #6
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Default re: India's economy set to be World's no 5 in 2019

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Originally Posted by V.Narayan View Post
Most certainly a proud achievement in 70 years from a divided impoverished land that most geo-political pundits expected to implode into several fractured little states.
I agree, and I really wish my parents, the pre-Independence generation, were here to see this. This country is far from perfect but improving, **very slowly** and in my eyes surely. In the top 5-6 economies..wow who'd have thought this huge land of disparate cultures, a veritable Continental Europe in itself (as I used to tell my Brit pals) could exist as a Union. There are lessons for our Colonial Masters to think about.
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Old 21st January 2019, 21:51   #7
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Default re: India's economy set to be World's no 5 in 2019

On the PPP measurement the current ranking of China US$23 Trillion, USA US$20 trillion, India US$ 9 trillion will hold for a long long time. Japan at 5 trillion and Germany at 4 trillion are not likely to double in PPP terms fast enough to catch up.

As per IMF estimates it will take us up to 2026/2028 at the earliest to get ahead of Germany in nominal terms and move to 4th place on the nominal rankings.
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Old 21st January 2019, 22:56   #8
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Default re: India's economy set to be World's no 5 in 2019

Sorry to be a wet blanket, but I think of this as an irrelevant milestone. Our population (1.33 bn) is 20x that of the UK (66mm). So it is a crying shame that it has taken us 70 years to overtake the UK in absolute GDP.

China was poorer than us in per capita income in 1980 - it is today 4.5x richer than we are. That is not something unique - it is following the path that was trodden by countries such as South Korea (which was almost as poor as India in per capita terms in the 1950s).

And this has nothing to do with inequality - just with our failure to prioritise growth over all else. Unless we mess up our policies, or let inflation take off, we will keep growing in absolute terms - till we get to about USD 4000 per capita in real terms (which would be in about 10- 15 years). But to get beyond that, we would need to innovate, create the Samsungs and Hyundais of our own - which would lead to more inequality, not less. So let's not celebrate so early, and recognise that we continue to be one of the poorest nations on earth.
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Old 21st January 2019, 23:05   #9
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Default re: India's economy set to be World's no 5 in 2019

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Originally Posted by Hayek View Post
Unless we mess up our policies, or let inflation take off, we will keep growing in absolute terms - till we get to about USD 4000 per capita in real terms (which would be in about 10- 15 years). But to get beyond that, we would need to innovate, create the Samsungs and Hyundais of our own
Right. The infamous middle income trap. Most Latin American countries reached $5000 per capita levels quickly but could not become 'rich'. South Korea successfully blitzed through this invisible/imaginary ceiling though.
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Old 21st January 2019, 23:23   #10
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Default re: India's economy set to be World's no 5 in 2019

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Right. The infamous middle income trap. Most Latin American countries reached $5000 per capita levels quickly but could not become 'rich'. South Korea successfully blitzed through this invisible/imaginary ceiling though.
A relative of mine, who visits South Korea on business trips very often, projects a grim picture. Financially things are so tight, people can't buy property or even get married unless both of them work.
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Old 22nd January 2019, 12:16   #11
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Default re: India's economy set to be World's no 5 in 2019

Almost all the countries mentioned on this thread such a China, Korea or even South American ones, have one thing in common. They broadly managed to improve basic education and health services for everyone during their growth phase, sometimes substantially. Bangladesh is considered a shining example for instance. So even with stagnant incomes now and no GDP jumps to boast of, people are actually enjoying what can be termed as better living conditions than their forefathers had.

Other than a few examples such as south India and some hill states, we have completely ignored these major drivers of future growth. And the proportion of our GDP spend on these gives hardly any hope of a revival. It's a miracle that we have managed to stay united politically and also achieve good growth for which a low base to begin with might have been the real reason, but I have a terrible feeling we may have squandered away our advantage of demographic dividend due to misplaced policies and pandering to competing interests. Spending heavily and working tirelessly on health, education and environmental well being could have truly transformed us into a middle economy country with all sections uplifted.

Although urban lower middle and lower classes now have the wherewithal to educate their kids in half decent private schools, and may thus have benefited somewhat. No surprise then, that we have a huge ongoing migration to cities despite the squalid conditions people have to endure.
(OT: the fact that 30-40% of our total population is yet to, and will eventually migrate to existing cities over the next two decades is oft under-reported phenomena while talking about the urban mess. Every major city will be at least 2 to 3 times it's existing population)

Last edited by avisidhu : 22nd January 2019 at 12:21.
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Old 27th January 2019, 02:12   #12
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Default re: India's economy set to be World's no 5 in 2019

I'm very happy that India is going to achieve this feat given our pathetic state in 1947. We're blessed with a rather stable government compared to other nations in South Asia and Africa.

While I say this, I also think growth will be further accelerated by educating children. A large fraction of India's population remains uneducated and this is a big worry. Also, this increases the gap between rich and poor.
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Old 27th January 2019, 04:47   #13
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Default re: India's economy set to be World's no 5 in 2019

How convenient.

We mock car manufactures when they claim success with BIG YoY% growth while in reality it was just a case of a real low base number in the previous year.

And here we have a thread comparing the GDP of UK and India. Two countries that have almost nothing in common with respect to this topic.

India has missed the bus to even be compared with China.

I don't know at which point people will stop playing the British rule blame card for problems in the new millennium.

Last edited by kiku007 : 27th January 2019 at 04:49.
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Old 27th January 2019, 06:23   #14
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Default re: India's economy set to be World's no 5 in 2019

We've also ahead of UK in the lack of infrastructure, lack of physical quality of life, lack of government welfare schemes, number of people below the poverty line, number of corrupt politicians, number of high value scams, etc.

As mentioned earlier, the size of the economy in financial terms is of no relevance when viewed alone and has to be taken in the context of the 20X higher population, per capita income / standard of living etc.
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Old 27th January 2019, 09:32   #15
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Default re: India's economy set to be World's no 5 in 2019

UK is 2,43,610 sq kms while India is 32,87,263 sq kms - that's 13.5x times bigger in size - that's more natural resources and avenues for increasing the size of the economy.
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