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India will become the world's next development engine

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India will be next development engine

China's economy remained the main engine of global development for two decades. But after China's economic slowdown in recent years, the world is looking for other engines of development and India can fulfill this need. Most economists agree that the pace of the global economy will be dictated by the pace of the Indian economy for the next few decades. At present, China's economy is facing many challenges, which is negatively impacting China's economic growth rate. Labor participation rate in India is increasing faster than China and due to this it is possible for India to come on par with China.

Many indicators show that the Indian economy is going to be the main engine of world development. There is one more aspect which reinforces this idea and that is the state of India's population. The average age of the people of India is 26 years while that of China is 37 years, and the young population has more manpower. By 2050, 19 percent of India's population will be over 60, while in China, 37 percent will be over 60, which means that India will have more youth. India's potential manpower will grow from the current 88.5 million to 108 crore in the following decades. India will have a higher number of working people, while China will have a more dependent population, which will result in a demographic dividend than the Chinese economy.

Between 1991 and 2014, China's annual growth rate reached an average of 10 percent. The reason for this strong economic mobility was particularly the combination of high exports and high levels of investment. But now a major change is being seen in the Chinese development model. Also between 2010 and 2017 the average annual wage of an employee doubled and wages increased faster than productivity. This has reduced China's international trade competitiveness. The International Monetary Fund believes that India's GDP will grow faster than China in the coming years. The possibility has also been expressed that India's growth rate will be higher than the average of developing economies, while further, if we estimate for a long time, India is going to grow at a rate of about 10 percent per year. According to a recent report by HSBC Global Research, by 2030, India will overtake Germany and Japan to become the world's third largest economy.

india will become next development engine

Talking about other parameters of economic progress, the Indian economy seems to be in a better position. The country's foreign exchange reserves are close to $ 400 billion. The foundation of the Indian economy has strengthened in the last few years. The balance of trade has improved and the current account deficit is less than 1.5 percent of GDP. Apart from this, the central government has kept the budget deficit under control. There have been significant economic reforms in the last few years in India. GST is important in this. Also, fixed targets of inflation and insolvency law are important. Doing business in India has become easier. In the last four years, the Central and State Governments have taken several steps to make the investment environment conducive, which has led to a quantum jump in Ease of Doing Business in the last four years.

India has today become a suitable place for investment for investors all over the world. India attracted $ 60 billion of foreign investment in the financial year 2016-17, reaching $ 61.96 billion in 2017-18. Foreign capital investment during the last four years was $ 222.75 billion, compared to $ 152 billion during the last four years (2010–14). It is clear that the way of big investment in the country is getting cleared and in the coming years this figure can register a higher pace. Significantly, for the last 10 years, the Indian economy has been included in the major countries attracting foreign investment. Increase in investment creates new capital which plays an important role in the development of the country. It is thus a long-term improvement in the economy. Increasing investment will further boost the economy, which will increase employment. Increased employment will increase the growth rate and also savings.

However, with a growing economy, we also need to focus on issues like income inequality. According to IMF, India ranks 126th in the world in terms of per capita income. Along with this, we have to work on new employment opportunities, weak infrastructure and social development. For the skill development mission to be successful, it is necessary that it becomes a national movement.

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