India among fastest developing countries in the world

Team Udayavani, Jun 15, 2021, 10:49 AM IST

New Delhi: The Indian economy has gone into hyperdrive once more. Experts project that it will soon be able to claim the title of the planet’s fastest-growing major economy.

In 2021, even in the middle of a very difficult period for most countries on the economic front, India is projected to grow by 9.7%. This beats every other major world economy and would signal a strong recovery – India is the 5th on the list of the countries with the biggest GPD by country, right after US, China, Japan, and Germany. On the other hand, it has the 122nd rank among the countries with the biggest GDP per capita, where countries like Qatar, Luxembourg, Ireland, and United Arab Emirates are among the top 10. The country obviously still has work to do.

What Factors are Driving Growth?

Perhaps the most obvious reason why India is growing at such a rapid pace is that it is still not a very rich country. In other words, there is plenty of room to play catch-up against other major economies.

This makes sense, and the evidence bears this out. If you look at other Asian countries since the second world war, we can see similar rates of growth following a strong economic shift.

External investment has also been strong, with foreign firms seeing potential India offers to investors. In recent months, millions of dollars have been steadily flowing into the country, and it is expected that as the global economy recovers even further, the external investment will grow exponentially. Experts project that this trend will continue into 2022.

Last year has been tough on the country, yes, but the recent leveling up of India’s vaccination drive is already starting to bear fruit in the economic sense. Sectors that were essentially idle, such as hospitality, entertainment, and transportation, are already showing strong signals of recovery.

Growing Industrial and Tech Sectors

While agriculture constitutes 53% of the market, India has been seeing growth in other sectors as well.

Industrial Sector
Analysts are also positive about India’s growth in the industrial sector, with economic action-driven construction in particular, seeing a very positive trend. Individual states in India have also performed beyond expectations, driving local demand, which has in turn resulted in an increase in goods and services tax.

Hospitality and Tourism
If we forget about the 2020 crisis for a moment, hospitality and tourism in India really do play a big part in the economy. The sector has significant potential considering the rich cultural diversity, variety in ecology, and places of natural beauty across the country. It is also one of the most digitalized nations in the world in the context of tools being used for booking, planning, and experiencing the journey.

What is more, during 2019 only, foreign tourist arrivals in India stood at 10.93 million, while by 2028, they are expected to reach 30.5 billion and generate revenue over US$ 59 billion. With this, India takes 6th place in tourism among Asian-Pacific countries, and 11th place among the countries with the highest income from tourism (which for India counts in $27,365,000,000). Compare this with some places most known for their hospitality and rich tourism like Turkey, UAE, or Mexico where these figures revolve around $22 million.

Tech, Gaming, and iGaming
The tech, gaming, and iGaming sectors, which have to some extent carried India’s positive economic figures, are continuing to perform. The gaming and online casino industry, for instance, is seeing a meteoric rise. With cellular charges decreasing and smartphones becoming increasingly affordable, Indian consumers have more ready cash to spend.

India’s lax regulatory policies in this sector have enabled these strong growth figures. Compare this with the UAE, currently the third-richest country in the world that invests a huge amount of money in tech and gaming accordingly. Despite these resources, the country lags behind in the iGaming sector due to regulations that make gambling essentially illegal. With many keen consumers looking for information on how to join an online casino in the UAE, they are left disappointed when the only solutions are complex and include VPNs or browsers like TOR.

While customers in India don’t have to go into as much trouble to access online gambling, this is not to say that the country doesn’t suffer from its own red tape problems – the bureaucratic red tape has often prevented businesses from starting the process, and strong labor laws have also sometimes scared off investors.

Is India the ‘Next China’?

The country’s unprecedented growth has left many commentators asking the same question: is India slated to become the ‘next China’ in economic terms?

The answer isn’t completely clear-cut. There are some fundamental differences between the two economic powerhouses, but the overall picture points to a very strong maybe. Let’s consider India’s demographic situation, which offers a huge bonus to the country, even relative to China.

By 2050, it is projected that India will be the planet’s most populous country, with a staggering 1.7 billion. That’s over 400 million compared to now. And compared to China, which features an aging population, the dependency ratio is going to decline by 2050. This means more working age people = greater economic growth.

On the other hand, however, India is still lagging on the three pillars of Chinese economic growth in past decades: investment, infrastructure, and manufacturing. India is still investing a minute percentage of its GDP, behind China by about 20%. China’s economy is also 30% manufacturing, half as much as India.

And when it comes to infrastructure, there’s no contest. China can boast advanced physical infrastructure, whereas India still very much relies on budget solutions and second-rate technology in many cases. There is still a lot of work to be done before India can even pretend to catch up.

The Future = Bright

Yes, India isn’t quite the economic juggernaut that China has become. But the fact that India lags behind in key sectors is actually a positive, especially considering recent growth despite these shortcomings.

The ‘solution’ for even further growth is increasing investment, funneling expenditure on infrastructure, and thereby increasing economic output. The talent is clearly present, with India’s lauded tech sector featuring some of the leading developers on the planet.

The raw material, so to speak, is strong. India has many things going for it, bolstering the positive outlook many experts have for the country. The only thing left to do is to catalyze these features and drive growth even further.