A Rising-India story despite global recession

By Lt Gen Dushyant Singh 

Higher growth – stable internal and external security environment – sustained economic growth of India despite adverse conditions. There were continuous efforts to give a reasonable living condition to the low middle class by keeping inflation relatively lower than most of the countries in the world including the U.S. and China.

How has India managed to keep its house not only in order but kept it on a rising trajectory despite the twin onslaught of COVID and the Ukraine war is a question that is becoming an enigma for political and economic pundits across the world.

India’s Strength 


India’s GDP growth in 2022 was approximately around 7 percent. The Gross Value-Added rose 6.7 percent, with trade, hotels, transport booking the biggest gain (13.7 percent), followed by construction (9.1 percent), utilities (9 percent), financial and real estate (6.4 percent). Meanwhile, manufacturing grew a meagre 1.6 percent and agriculture 3.5 percent as per Ministry of Statistics and Programme Implementation- MOSPI.

  • India became the fifth largest economy in the world leaving behind the size of the UK’s economy by USD 34 billion.
  • In PPP terms, India’s GDP stands at USD 8.9 trillion with only US and China being ahead of it.

If we look from the perspective of inflation, It is around 5.1 percent in India. Inflation in OECD countries is around 10 percent and importantly, out of the 38 OECD countries 18 recorded double-digit inflation. Although China has recorded a low inflation rate, its rural and urban divide is increasing gradually which is leading to internal unrest, especially in the view of COVID related policies.

Moreover, as per OECD baseline projections, India would overtake the U.S. to become the second largest economy in terms of size of GDP in purchasing power parity (PPP) terms by the late 2040s. It is projected to reach $30 trillion by 2048.

Therefore, India is well on track to lift itself from the developing to a developed economy in one’s lifetime only. India is expected to become 1.5 times of the world per capita GDP by 2057.

Another argument that busts the per capita argument is that the share of the middle class, with an annual income between Rs5 lakh to 30 lakhs has doubled since 2004 to 2021 from 14 percent to 31 percent and is projected to rise to 63 percent by 2047 when India celebrates 100 years of Independence.

The table below tells the India story quite vividly. In 26 years, India’s super rich will show an 18-fold rise.

Challenges Ahead 

There is no ambiguity that India is well on its way to emerge as the third pole in the global order. That too without compromising on its core principle of value based international relations and internal functioning.

However, its vision of becoming a “Vishwa Guru” can only materialise if it ensures that the challenges facing the country are dealt with seriously.

The population must become productive

To achieve this, the government needs to invest at least 6 percent of the GDP and 3-4 percent of the annual budget on health. A related point with population is the utilisation of the women work force – 18.6 percent as of 2020 as per ILO.

Investment in education and skilling along with an awareness program to encourage female participation must be ensured. The National Gross Enrolment Ratio (GER) of girls in secondary schools improved from 77.45 (2014-15) to 81.32 (2018-19) – a betterment of 3.87 points in four years.

Government expenditure relative to GDP must increase 

The tax base for this must be expanded along with reduction of certain subsidies. According to the 15th Finance Commission’s estimates, there is still over 4 percent gap in Tax-to-GDP ratio between India’s tax collection potential and actual collection. Aim should be for a 16 percent Tax-to-GDP ratio in the medium term from the current levels of 11.7 percent.

Infrastructure Development 

India has managed the balancing act quite well in the last few years but it needs to continue this path. A balance needs to be maintained between the revenue and the capital budget ensuring complete utilisation of capital receipts including the fiscal deficit for capital expenditure.

Keeping fiscal deficit and inflation under check 

The government has done well to address the fiscal deficit by aiming to reduce it from 6.9 percent to 6.4 percent from the previous year but the target in the next three to four years must be to achieve a rate of around 4 percent. To reduce the foreign dependency India needs to focus on self-sufficiency or Atma-Nirbharta, especially in the high tech and defence sector.

Enhancing Hard Power


While India is well on track in promoting its soft power, its performance in developing its military capability has lagged the leading military powers. This has resulted in India not attaining its justified place in the comity of nations, given its size and human resource.

It is the world’s highest importer of defence equipment and it is a well-known fact that an import dependent force is always at the mercy of the exporting countries. India’s defence budget hovers around 2 percent of its GDP.

The ongoing threat to India from Cyber Warfare and Information War is only going to increase and India needs to address these threats using all the domains diplomatic, information, economic and above all military. In terms of security threat, we also need to add the threats posed by terrorists, anti national elements, and militants. The condition today is that India is struggling for a good quality small arm for its ground soldiers.

It would also be interesting to note that China ramped up its defence budget by 7.1 percent and is much more than the combined defence budget of Japan, South Korea, the Philippines, and India.

A Long Way to Go

To sum up, India is well on course, and as per world bank assessment one of the few countries that have the wherewithal to deal with current global recession. It has a decent foreign exchange reserves, world’s largest gold reserves, its inflation remains under check, it has addressed the people friendly policies that cater for the well being of the people as more and more come into the middle-class bracket creating a huge domestic market for indigenous industries.

Given India’s commitment to a value and rule based international relations policy, India should tide over the obstacles posed in the way of its justified growth as an emerging third pole in the world and surge ahead of the US economy by late 2040s.

Lt Gen Dushyant Singh, PVSM, AVSM is an alumni of NDC, DSSC, CDM and Naval Postgraduate School California, USA. He specializes in Terrorist Operations and Financing in the US. He has served as the General Officer has commanded an Infantry Division in Jammu and Kashmir. He is now a Professor Emeritus at Rashtriya Raksha University.


Disclaimer: The views expressed are not necessarily those of The South Asian Times  

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