India@75: A Reality Check! Decoding The Bullishness Around The Indian Economy!

Has the Indian Economy “turned the corner” with regards to the post-pandemic “recovery” gathering steam and most economic indicators in the “green”? Or is it just the “spin” around the growth prospects making us believe that “all is well” with the Indian Economy? If the former is true, why is the tag of the world’s “fastest-growing major economy” not translating to “real” job creation and the feeling of well-being by the masses? On the other hand, there are also signs that the Indian Economy is “out of the woods” as the many “green shoots” such as PMI (Purchasing Managers Index) and the Employment Rate picking up indicate a robust recovery. At the same time, the Rupee breaches new lows every day, straining the CAD (Current Account Deficit) when inflation erodes the real wealth of Indians.

So, there you are with the many “puzzles and contradictions” about the Indian Economy, making it difficult to analyze whether we are growing or recessionary. Moreover, the confusing and conflicting sets of economic data and statistics often make forecasts awry, necessitating periodic “revisions” to the growth estimates and even the growth figures announced earlier. Indeed, this is why some economists in leading public sector banks like the SBI (State Bank of India) note that the Indian Economy has become a “forecaster’s nightmare”. More so when the official statistics themselves are deemed unreliable due to the frequent changes in methodology and the “opaqueness” surrounding the gathering and reporting of economic data.

However, there are enough reasons to be “bullish” on India. The country that celebrated its 75th Independence Day in August has come a long way since its Independence, what with it discarding the “begging bowl” and becoming an “aspirational” power, claiming to be in contention to be an economic powerhouse, with a “$5 Trillion” Economy. India@75 is now the world’s Fifth largest economy, having overtaken its former colonial masters, the United Kingdom, briefly last month. So, there are good reasons for all the “chest thumping” with the Indian Prime Minister, Narendra Modi, being “wooed” by both East and West, as well as a “strategically autonomous” foreign policy placing it in a geopolitical “sweet spot” on the world stage. The task before Modi now is to convert this “leverage” into economic gains by pursuing geoeconomics in addition to geopolitics.

The reasons mentioned above are why leading voices in the West are now “betting on” India and looking at longer-term “no limits” partnerships. As France and the UK signal this approach, The Economist Magazine called this decade “Modi’s to lose”, thereby challenging us to realise our potential. This “bullishness” is also reflected in the Davos meets, where India is quite the “flavour”, with this year’s gathering pointing to the Indian Economy’s strengths while warning about a “darkening” global macroeconomic environment. With all this attention on the Indian Economy, it sure looks like India@75 is arriving after decades of being told it is a “caged” Elephant which can overtake its Asian “tigers” once unshackled. Perhaps, this is the real McCoy for India@75.

While the praise is all good and fluffy, much work must be done before the Indian Economy becomes on par with that of a developed country. First, India@75 cannot “leapfrog” into developed country status without a Manufacturing Renaissance. As things stand, the Indian Economy is a “one pony trick” powered by the services sector. Second, as mentioned briefly earlier, the “jobless” growth does no good to anyone, and we must “fix” the Informal Economy in addition to Manufacturing and Agriculture. India@75’s much-vaunted Demographic Dividend is already being wasted, with Crores of Indians not even looking for jobs. Today’s social strife manifests in India’s Youth needing jobs and not jails. Third, the extreme inequality and inequities which have turned the Indian Economy into a “Billionaire Raj” need to be addressed if we are to avoid “Million Mutinies”.

Last, no country becomes a powerhouse by neglecting Healthcare and Education. The inadequacies of both were exposed during the pandemic with our “abysmal” handling of the successive waves, which revealed the “faultlines” in our society and laid bare the many “fissures” that can trigger earthquakes (metaphorically). Our healthcare systems “struggled,” and we “unlocked” in as much of a hurry as we locked down without scientific rationale. When we “lost a generation” of learners, unable to access the virtual pedagogy due to the Digital Divide, there is a certain cynicism about the “hype” over India@75. To conclude, India@75 is still a “work in progress”, and the “reality check” discussed here should hopefully spur us to work harder and not engage in pointless vitriolic debate.

 

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