In last year’s Independence Day speech at the Red Fort in Delhi, Narendra Modi made a bold pledge: India would become a developed economy by 2047, when it celebrates 100 years since its founding. The country had three things in its favour, the prime minister declared: “demography, democracy and diversity”.
The vow would have seemed implausible a decade ago. In 2013, the year before Modi took power, India was identified by Morgan Stanley among a group of vulnerable emerging-market economies, dubbed the “Fragile Five” for their reliance on foreign capital to fuel their economies and, in many cases, big current account deficits.
Ten years later, Modi’s India is firmly in the sights of international investors, consultants and trading partners as one of the world’s fastest-growing big economies and a critical “China plus one” destination for companies seeking to reduce their exposure to political currents in Beijing.
In India’s upcoming national election, expected between April and May, Modi will make much of his Bharatiya Janata party’s economic record during its 10 years in government, touting its successes in delivering growth, reducing poverty and building infrastructure including airports, railways and roads.
But what do the numbers show?
The Financial Times has analysed official data for gross domestic product growth, unemployment and poverty reduction, as well as indicators tracking job creation and employment, examining how they have performed in absolute terms and comparatively against other countries in some cases.
India’s statistics are in many cases deficient — the country has not held a census since 2011, for example — or in dispute, as in the case of unemployment data, but the numbers point to some clear trends.
During Modi’s two terms in office, India has on average been one of the fastest-growing large economies. Between 2014 and 2022, GDP grew at an average of 5.6 per cent in compound annual growth rate terms. An average of 14 other large developing economies had a CAGR of 3.8 per cent over the same period.
But India’s growth rate was even higher from 2000 to 2010, at more than 6 per cent on average. Economists said India’s economy would need to grow faster than its current 6-7 per cent rate in order to absorb a growing number of entrants into the workforce and meet Modi’s goal of reaching developed country status by 2047.
India is the poorest among the Brics nations, said Raghuram Rajan, professor of finance at the University of Chicago Booth School of Business and a former Reserve Bank of India governor, referring to the grouping that also includes Brazil, Russia, China and South Africa. It also “has a much longer distance of travel before it reaches their level of per capita income”, he said. “Growth has been good, but it has to be set in perspective.” Extreme poverty has continued to fall since Modi took power. The share of India’s population living in extreme poverty has fallen from 18.7 per cent in 2015 to 12 per cent in 2021, according to World Bank data. Urban and rural regions both registered a drop in the share of people living below the international poverty line of $2.15 a day.
Read More at https://ft.com/content/8299d318-7c35-49a0-9a9a-b8e5abeba7be
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