India – The Fastest Growing Economy in the world
India’s growth rate is expected to rise to 7.5 per cent this year, so it will be not wrong to say “India is the Fastest Growing Economy of the world”. And it is still welcome to see India growing well, while the other Asian giant China’s economy is slowing to 6.3 per cent in 2016.
It is widely known that China’s growth is getting down but do you know how India has taken the title of “fastest grown country?”
Both India and China are the two most rapidly growing economies in the world and rank among the top 10 largest economies, each has 20% of the world’s population, both are major global trading partners. These are the similarities, that are easy to get, but the differences are the key to understanding the factors behind India’s growth.
Let’s discuss some of those factors to have a clearer idea.
The Economic Sectors in India
China’s economy is focused on export-driven manufacturing and infrastructure that is more spending to services and the consumer-driven economy. While India has services and consumer-driven economy, more focused at spending on infrastructure and increase manufacturing output.
So India is less affected with the manufacturing slowdown than China. It also illustrates that India has higher value-added growth than China’s former low-cost export model.
The Democracy in India
Unlike China’s one-party system, India is a democracy follows quicker policy actions to boost growth. Prime Minister Modi is focused on developing the nation’s infrastructure, building an educated workforce and making the business environment friendlier to foreign firms that have facilitated India’s fast growth.
The Risk Factor
You all have must hear about the famous phrase “Made in China”. This is the biggest risk China is facing. China’s efforts to boost growth have failed as demand weakened in the post-Great Recession environment that led to a large buildup of debt and overhangs the economy.
Opposite to this, India’s biggest risk may come from inside the country itself. India’s economy is more dependent on the consumer than on demand for exports. The drop in oil prices has helped to reduce India’s consumer-driven trade gap. The World Bank estimates that 47% of jobs in India are in agriculture. This means that India’s biggest risk now may be the weather. Bad weather can lower jobs and income losses that could weaken growth.
These are the main factors taking India to a Growth Level. Now, you might be thinking that the India’s growth is about as good as it can possibly get. 7 to 10 percent growing rate per year is very good as a limit at which an economy can grow. But to drive India through being a developing and then middle-income country around the globe, it will require continual taking care of those factors from which growth can occur. It is not true that only the government can plan the economy, we people are also involved in it. But it’s also true that government has to create the environment first in which private economic factors can generate that growth.