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With global economic growth expected to drop below 2 percent by 2023, India’s economic growth is expected to remain at around 5 percent. India’s high growth is not a post-pandemic recovery, but a reflection of its structural strengths and growth drivers.
In terms of global growth, a combination of cross-border shocks and global forces has created significant uncertainty for the future and potential for the medium-term global outlook. But India is seen as a bright spot in this global recession.
The world’s population is aging rapidly across a group of countries that account for more than 75 percent of global GDP, fueling inflationary pressures, supply shocks, epidemics, and debt levels. mainly related to the elderly population. Trade and financial policies are being used not only to respond to unexpected shocks but also to the global forces of an aging population and climate change.
Frameworks for fiscal and monetary policy have changed due to changes in global conditions. How will India’s growth be affected by these changes?
India’s growth model is less susceptible to changes in global forces. India has been a success story in terms of exporting services, and services have experienced a smaller decline compared to manufacturing during the global recession. Global exports of digital delivery services have more than tripled in the last two years, outpacing trade in goods, making India a winner.
The Youth League of India
India’s growth will continue to benefit from population diversification and a youthful boom. India’s demographics are well-positioned to withstand adverse economic-demand shocks, and there is room to borrow from residents and build public relations to pay extra for the physical and human structure. India’s savings are also rising. So, the future benefits are as follows:
First, the young population avoids the risks of rising wages, as the workforce swells as baby boomers reach working age.
The second is the increase in women’s employment which is accompanied by a decrease in productivity.
The third is the working years which are the first years of saving money, the key to raising capital, building infrastructure and technology. And the fourth is the increase in savings that occurs as the incentive to save for longer retirements and longer life expectancy increases.
India is expected to emerge with a middle class similar to the size of the US today. Empirical evidence, based on Indian housing surveys, demographic change and the positive aspects of urban living, show that a major shift towards middle class society is already underway.
The middle class makes four main contributions to economic growth and social progress. First, the middle class is the source of entrepreneurship. Second, the middle class is a major contributor to savings and human capital, as the savings rate and willingness to invest in human capital are higher among middle-class households.
Third, they strengthen ties to education. The fourth channel that makes the middle class special is food related. The growing demand for consumer goods – cars, motorcycles, televisions, air conditioners, mobile phones and refrigerators – is already happening.
The topic of global climate change will turn into global trade policies and supply chains. India has made significant progress in improving energy efficiency and green growth. Energy-intensive industries (iron and steel, fertilizers, petroleum, cement, aluminum, and pulp and paper) have recorded improvements in energy efficiency. Digital advancements add to the advantage.
The author is the Director, Pune International Development Centre
Published on November 29, 2022
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