Economy: Glass permanently half full

Many people seem convinced that the Indian economy is on track to becoming a developed nation.

- DEBASHIS BASU

The untrammelled bullish case is that we have shed the vulnerabilities that were obvious until 2014, when the Indian economic renaissance burst forth. In this view, a steady gross domestic product (GDP) growth rate of more than 7 per cent will transform India into a developed country or Viksit Bharat. The definite signs of this right now are a low level of debt-GDP ratio, a low current account deficit (heading towards a surplus), a strong banking system, a well-managed Budget deficit, and low inflation. According to another minority camp, to which I belong, these are glib claims. A lot of positive factors may have temporarily created a favourable situation for now, but they only serve to hide many continuing core weaknesses. Besides, the data behind some of the positives is questionable. Let's consider each of these positives one by one:

Debt-GDP ratio: While the government claims that India's debt-GDP ratio is low, according to the World Bank and International Monetary Fund, it is above 82 per cent, among the highest ever. The ratio rose continuously from the low of 2014, hit a peak of 89 per cent during the pandemic, and remained above 80 per cent over the next few years. The last time the figure was above 80 per cent was in 2004, the peak of the previous 25 years being 83 per cent in 2003, not too far from today's level.