The India Growth Story

Spurred by the embrace of new-age tech and the expanding opportunities of India’s businesses, the country’s economy has finally started spreading its wings

-  ANAND RATHI

ACCORDING TO THE seminal work of the late economist Angus Maddison on the economies of previous eras, India was the largest economy of the world between 1AD and 1700 AD-85 per cent of the time in the past 2,000 years. It accounted for anywhere between one-third and one-fourth of the global GDP during this period.

But systematic exploitation during the colonial rule resulted in rapid deterioration and by Independence, India's share in global GDP had shrunk to 1 per cent. Now, over the past 30 years, India has made rapid progress and restored part of that lost glory.

Today, it accounts for nearly 4 per cent of the global GDP in terms of market exchange rate and over 7 per cent by purchasing power parity. India's global ranking by the economy's size has also improved from 16th in 1996 to fifth in 2021. Since 2015, India has almost consistently been the fastest growing major economy.

According to projections of the IMF, the country is likely to maintain that position till 2027.

Today, India has the second-largest agriculture-, fifth-largest manufacturing- and seventh-largest services sectors. Among systemically vital countries, it has the fourth highest investment rate and the fifth highest savings rate while its consumption spending is seventh highest. Its progress over the past three decades has not remained confined to the economic sphere.

There has been all-round growth in sectors such as infrastructure, defence, financial inclusion, education, healthcare, gender equality etc.

Over time, India has created a diversified manufacturing base. A large part has been driven by old sectors like construction, engineering goods, consumer staples, automobiles, etc.

Despite these achievements, India's success has been less pronounced in three crucial areas.

First, the share of manufacturing in GDP has not crossed 20 per cent.