The Indian elite, official spokespersons and the international media have piled on the narrative that India’s economy is booming and making the country the great success story of the twenty-first century. But given the confusion created by the headline GDP numbers, nothing could be further from the truth.
PRINCETON – The Indian elite is bullish about their country’s economic prospects, and that optimism is being reflected abroad. The International Monetary Fund estimates that India’s GDP will grow by 6.1% this year and 6.8% next year, making it one of the fastest growing economies in the world. Other international commentators have made even more impressive predictions, announcing the arrival of an Indian decade or even an Indian century.
In fact, India is walking a dangerous path. All cheerleading is based on a game of insidious numbers. Compared to other economies, India’s yo-yo fell sharply twice in the three calendar years from 2020 to 2022, with the emergence of COVID-19 and then returned to pre-pandemic levels. Its annual growth rate in these three years was a meager 3.5%, similar to the year just before the Covid crisis.
All forecasts of higher future growth rates are outpaced by the latest pandemic rebound. Still, with pandemic-related constraints largely in the rearview mirror, the economy is set to slow in the second half of 2022, and that weakness has persisted into this year. Describing India as an emerging economy is wishful thinking disguised as bad economics.
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