Cheap thrills, by the trillions

NEW DELHI: Last week, PM Modi declared that in his next term, India will be among the world’s top three economies. A few numbers might help make sense of it. In 2014, India was a $2 trillion economy and was ranked 10th globally. A year later, it notched up three rungs, and was ranked 7th. By 2017, it was ranked 6th, followed by 5th in 2021. The latest IMF projections estimate that we could emerge as the world’s third largest economy by 2027, trailing the US and China.

Before we bring out the bugles, let’s put these projections into context. India is currently a $3.6 trillion economy and won’t hit the $5 trillion mark by 2025, as promised by the PM previously. Nations around the world have been battered by the polycrisis — the pandemic, the war in Ukraine, economic slowdown, recession, and inflation.

Amidst this, India must grow at over 8% per year in dollar terms, between 2024 and 2027 to bag the third spot. But such linear growth at such high rates has not been witnessed in recent years. If we need to climb two spots, Germany, which is now at number 4, must remain lethargic on growth, while third-ranking Japan should also crawl towards recovery. Its economy had contracted to less than $5 trillion in 2022, and analysts have pegged it to remain so until 2027.

It is impractical to rely on the sluggishness of our peers to buoy India’s growth. We must addressed a few concerns right away. Our low GDP per capita is a major issue. Economics experts believe this metric to be a better indicator of national prosperity. Sadly, India has the lowest GDP per person among the 10 largest economies. In dollar terms — an average worker in India earned $1,560 in 2014, while the average American cashed in a paycheck 35 times higher — at $55,084. Germans earned 31 times as much; the Brits 30 times; Italians, French and Japanese earned 20 times as much as the average Indian. Even the Chinese beat us 1:5 in terms of income.

This singular metric — the GDP per capita puts India in the category of struggling economies like Pakistan, Zimbabwe and Yemen. In 2027, the country is set to be ranked 138th among 189 countries. Come to think of it: an average Bangladeshi will pocket $282 (Rs 23,000) more than the average Indian in that year. That’s because, despite being the fifth largest economy globally, India’s GDP per capita was $1,947 in 2021, whereas Bangladesh’s GDP per capita was $2,227.

It is worth remembering that millions of people in India are still beset by poverty, and there’s the spectre of grave unemployment looming over us. As many as 150 mn people are said to be part of the urban workforce in India, but less than 50% of them are employed full-time. Almost 1 in every 4 young individuals is jobless, the median wages are down in the dumps, and the pandemic has exacerbated the wealth gap between the haves and the have-nots. As per the Centre’s annual economic survey, our GDP can rise in the 7-8% range provided economic reforms are executed well. Needless to say, all these numerics will amount to window dressing unless the country sets charts out a roadmap targeting an equitable distribution of wealth that leaves no class behind.