India’s GDP growth in Q1FY23 was 13.5%. At this rate, India is likely to be the fastest growing economy in the current fiscal year. Interestingly, even though India’s FY23 GDP growth rate estimates currently range from 6.7% to 7.7%, we strongly believe it is irrelevant. In a world wracked by uncertainty, we believe 6-6.5% growth is the new normal.
Nevertheless, we are passionately committed to updating the IIP basket which is made up of a set of products from 2012 and is hopelessly outdated. For example, the IIP basket does not contain exports of handsets which are now produced by companies like Foxconn in India. Separately, steel production by some companies has undergone a change in location that is not part of the IIP sample. Nokia’s handset factory in Chennai closed after 2014. Hilariously, the factory now produces 5G radios. We believe manufacturing growth in India will see an upward revision once this is done.
Meanwhile, India has undergone significant structural change since 2014 and is now the 5th largest economy. Interestingly, India had overtaken the UK as the 5th largest economy as early as December 2021 itself and not recently as claimed. India’s share of GDP is now 3.5%, compared to 2.6% in 2014 and should cross 4% in 2027, which is Germany’s current share of global GDP!
India’s path since 2014 reveals that India is likely to get the label of 3rd largest economy in 2029, a move up 7 places from 2014, when India was ranked 10th. India is expected to overtake Germany in 2027 and most likely Japan by 2029 at the current growth rate. This is a remarkable achievement by any measure.
In the coming days, India should be the beneficiary, as China slows in terms of new investment intentions. The recent decision by global tech giant Apple to shift some production of its flagship iPhone 14 model for global shipment from India, with a negligible lag of a few weeks after its scheduled September 7 launch, shows such optimism! The move by Apple, the most recognizable face of technological innovation over the past two centuries, to capture the aspirations of an upwardly mobile population should open the floodgates for other major conglomerates to follow suit.
Widespread growth in empowerment will also raise India’s per capita income from current levels, which could also act as a force multiplier for a better future. At the beginning of the 21st century, China embarked on a path of accelerated growth by occupying the second largest economy. We believe that with a good political outlook and a realignment of global geopolitics, our current estimates could even undergo an upward revision!
Disclaimer: The views expressed in the article above are those of the authors and do not necessarily represent or reflect the views of this publishing house. Unless otherwise indicated, the author writes in a personal capacity. They are not intended and should not be taken to represent the official ideas, attitudes or policies of any agency or institution.