Tags: India is wining, Global Economy Race, India to leave behind China, Indo-German Summit, India vs China, GDP Growth, FDI, PM Modi, Merkel, Population, Oil, GST, Democracy
Make in India logo models at Bosch Vocational Center in Bengaluru on October 6
Prime Minister Narendra Modi on Tuesday Oct 6, 2015 asserted that within in 15 months his government has successfully restored the credibility of India in the eyes of global players through its transparent and progressive reforms thus ensuring a level playing field.
At a time of global slowdown, India represents a bright spot for investments: PM’s address today at the Business Forum in Bengaluru
Why India’s population will outstrip China’s in just seven years. India was initially estimated to beat China only by 2050. PM Modi asks to the corporate world here how China’s economic slowdown may be- India’s opportunity? South Asia, especially India now the fastest-growing region in the world, could take greater advantage of cheap oil to reform energy pricing as World Report says on April 13, 2015. China and India Reshape Global Economy. India tries with its best to be No.1 to replace China. How both countries are being effected by Local and global effects? How they are governing economic growth?
Arguably, China’s expansion since 1978 already has been the largest growth “surprise” ever experienced by the world economy, having exceeded an annual growth of 9% from 1980 to 2014.
Four decades ago such as 1961, 1969 and 1970, its per capita income was below to India or close to India’s. Is this going to change? Since 1990, its growth has continuously surpassed India’s. World report says India’s growth rate cross even in 2017. If this happened then sweet is in your mouth (Tumhare munh mein Ghee shakkar). But according to Kaushik Basu, Senior Vice President and Chief Economist, World Bank, n one of all this is going to change in a hurry: http://blogs.worldbank.org/developmenttalk/india-china-and-our-growth-forecasts
The last two rounds of purchasing power parity (PPP) computation for the world occurred in 2005 and 2011. It turns out that in terms of PPP-adjusted GDP, India overtook Japan and Germany between 2005 and 2011, and stood behind only the US and China. (Note: As of October 2014, China’s PPP-adjusted GDP has overtaken that of the US).
The expected growth of 7.5% this year is worse than India’s performance in many past years, but it is quite remarkable given today’s subdued global prospects.
India’s growth last 11 years
Goods and Services Tax (GST)
A second dynamic relates to several important policy initiatives laid out in the Union Budget presented in February 2015. The most important is the Goods and Services Tax (GST), which will create a unified national taxation system, cutting down transactions costs for businesses and the movement of goods. Data collected by the World Bank show that, when Indian trucks carry freight between cities, 60% of the time is spent stationary, mainly at check points to pay taxes and get permits. The GST can cut down this colossal wastage. Indeed, India’s biggest stumbling block has been its large transactions and bureaucratic costs.
Fall in Oil Prices
The fall in oil prices since June 2014 has turned out to be a boon for oil-importing India. The high cost of oil has caused India’s current account deficit to be large and created a heavy fiscal drag for decades. This has eased greatly over the past 9 months and the Bank’s projections suggest that oil prices will be low — somewhere between 55 and 70 dollars—over the medium term. This is a great opportunity for India to reform, deploy resulting savings to boost spending on health and education, and promote shared prosperity.
The democracy presents an interesting dynamic for India. On the one hand, it can be a drag and often is. A democracy like India’s makes it difficult to experiment with new policies and to make policy switches of the kind China could make easily and even Korea made in the 1970s. On the other, it does provide a stability and basis for sustained development. India is fortunate that, through the rough and tumble of economic life, it has managed to hold on to democratic traditions and a vibrant media.
Why India’s population will outstrip China’s in just seven years. India was initially estimated to beat China only by 2050. Over the past 20 years, aggregate measures of global inequality have changed little even if significant structural changes have been observed. High growth rates of China and India lifted millions out of poverty, while the stagnation in many African countries caused them to fall behind. If this trend remains continue in the future then definitely 21st century belongs to India.
Research paper “Global Growth And Distribution : Are China And India Reshaping The World?” published in 2007 explains that millions of Chinese and Indian consumers will enter into a rapidly emerging global middle class-a group of people who can afford, and demand access to, the standards of living previously reserved mainly for the residents of developed countries. Notwithstanding these positive developments, fast growth is often characterized by high urbanization and growing demand for skills, both of which result in widening of income distribution within countries. These opposing distributional effects highlight the importance of analyzing global disparities by taking into account – as the GIDD does – income dynamics between and within countries.
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