Indian economist’s view: the battle between India and China to become world’s largest economy in upcoming years

Covid has eventually affected economy of India and pushed it to 6th largest economy of world from 5th position in 2020. But India is about to overtake UK by 2025 and will place itself on third spot by 2030, according to Centre for Economics and Business Research (CEBR). CEBR published an annual report on 26 December 2020 stating, “India has been knocked off course somewhat through the impact of the pandemic. As a result, after overtaking the UK in 2019, the UK overtakes India again in this year’s forecast and stays ahead till 2024 before India takes over again”. As per CEBR, weakness of rupee led India to go down in the list of economy. It forecast that India will get back its economy and will expand it by 9% in 2021 and 7% by 2022.

Amit Singh who was previously working with Federation of Indian Chambers of Commerce and Industry (FICCI) is an economist by profession. While talking to Eat News he commented on India’s economy and about the recent report published by CEBR. He said, “Well we did overtake them in 2019 and slipped to the next position in 2020 which was due to market conditions being affected due to Covid-19. It is surprising that India will take 4 more years to overtake them. But seeing the current revival of the Indian economy in this quarter and also seeing the record high GST revenue collection, it is quite evident that the Indian economy will take over the UK’s before 2025 maybe around 2024 or 2023 if the government’s action and policy are planned and executed well”.

Indian Ministry of Statistics showed India’s growth went down to 3.1% in the fourth quarter of the fiscal year in 2020. But according to Amit economy is growing with a good speed. He said, “Well this fiscal year and the financial year will show us negative growth honestly. As many experts said there will be V shaped growth of the economy”. He suggested what all strategies can help economy to boost and can be stable back again. “The government should first be able to vaccinate the majority of the population, because this will lead to a positive mindset among the people of this country as well as the investors that it is safe to work again with full throttle. Also, the government should increase the spending on social welfare and as well as further reduce the tax burden on MSMEs especially and the automobile sectors as the majority of people are dependent on it”, said Amit. He also added that government should also increase the consumer demand by cutting the repo rate by 50 bps temporarily for another quarter or so, as since then we expect the market to be back at the level as it was pre pandemic times.

Service sectors has always majorly contributed to the GDP of the country, be it banking and financial sector, IT sector, consultancy, e-commerce, tourism etc. These sectors have been affected in different ways due to the pandemic. According to Amit Singh, “Yes it has but the impact is not major in the banking sector since it was operational even during the lockdowns whereas the IT and consultancy sector was working from home and the e-commerce sector was thriving due to its on time and safe delivery. But the tourism sector was hit severely as no one was travelling due to lockdown in the initial days and even after that the people were scared to go out on a vacation due to the Covid-19”.

He further added, “There were lot of layoffs in these sectors especially in tourism sector where the hotel, restaurant owners have fired several employees due to minimal customer coming which has affected the families as well as the economy indirectly as due to unemployment the consumption per capita will also decrease. Also, the agriculture sector was the only sector recently that had the highest growth if we compare to the other sectors.”

Economy has not been constant from past few years and lot of criticism has been spelled out from experts and oppositions, under the ruling party BJP’s leadership. Keeping his views on it, Amit Singh shared, “The country’s economy has increased if we see the size of our market and compare with the other developed countries and developing countries. But yes, some crucial sectors have seen a negative impact such as the real estate sector, this sector was booming the early 2010s but ever since the NDA government came in to the power, the sentiment across this sector has seen negative impact, the numbers may show positive but among the builders and the investors it is a downfall.” According to Mr. Singh, reason behind economy going down in recent few years compare to previous years is due to the effect of GST implementation as the business owners and the teams were not professionally trained well enough to cope up with the new system and the same also implies with the government as well since they have introduced so many amendments and still are working on them.

On China becoming world’s largest economy by 2038 as per the report, Amit thinks it’s because of their hard work, dedication towards their country and also being opportunistic especially in the international trade market leading them to be the largest exporter in the world. He said, “This might lead to a shift in the superpower in the globe as the US trade scenarios are slightly falling off the hook as many US originate countries are opting to shift their bases in China and India due to low operational and handling cost.”

“The next battle in the international market will be between India and China that is the battle between The Tiger and The Dragon in the 2030s. This will be crucial since the power will be shifted from the western countries to South Asian and East Asian countries for conquering the world economy”, according to Amit Singh.