India to Overtake China’s Economic Growth

Last Tuesday, the International Monetary Fund released projections that forecast India’s economy growth by 7.5% in 2016, which would overtake China’s predicted growth of 6.3%. If this were to occur, India will become the world’s largest growing economy.

Indeed, under the leadership of India’s recently appointed Prime Minister, Narendra Modi, India is set to undertake a series of aggressive economic measures that would aim to grow its GDP by having a tight control over its monetary and fiscal policies as well as reforming its many infrastructural problems. Naturally, as a result of Modi’s vision and leadership, economists and investors have placed great hope in India’s future financial performance.

Nevertheless, regardless of this, the country still falls short of China in terms of gross economic output. In 2014, while India’s total economic output was over $2 trillion, China’s output was almost 5 times greater. Even if both countries use optimistic growth projections with India rising to 8.5% growth annually and China maintaining its current 7%, it would still take India about 80 years to match China’s economic capacity.

Despite this news may encourage speculators to put their money in investments in countries with more favorable returns, they should note that the Indian economic landscape is still undergoing major changes and that there are still definitely opportunities to be uncovered. For instance, as a direct result of the country’s ability to curb economic roadblocks, such as weak domestic demand, high inflation, and increasing government deficit, its economy has almost doubled from 2009 to 2014.

Personally, I feel that irrespective of the actual size of the Indian economy, it definitely presents many ripe economic investment opportunities amidst its ever changing landscape. If the country is able to clean up some of the fundamental issues with its economic structure and business environment, and leverage Modi’s current and to-come economic policies and reforms, then its growing number of businesses and young population can definitely help its economy evolve to a whole new level.

-Yue Song