India is experiencing strong economic growth, providing a key advantage for Prime Minister Narendra Modi’s re-election campaign.
The country’s GDP grew by 8.4% in the last quarter, surpassing many analysts’ expectations. This growth pushes the yearly rate to 7.7%.
Moody’s Ratings predicts India will lead G20 countries with 8% growth in the coming fiscal year. Meanwhile, the government estimates a 7.6% increase.
Jefferies believes India will become the third-largest economy by 2027, thanks to sustained growth under Modi’s leadership, a young population, and better governance.
This economic momentum is timely for Modi and his Bharatiya Janata Party (BJP) as elections approach.
Yet, experts like N. R. Bhanumurthy remind us that this success builds on policies from the last two decades, involving multiple administrations.
India’s position is strengthening as global dynamics shift. Nations are diversifying supply chains from China, favoring India due to its strong international relationships.
This aligns with the ‘China+1’ strategy, benefiting India significantly.
However, some analysts, including those from Nomura, urge caution. They point out that while public spending on capital projects is high, private spending and consumption lag behind.
This suggests the economic boom might not be as broad-based as it appears.
Critics also discuss the difference between GDP and Gross Value Added (GVA), with GVA offering a clearer economic picture.
Key concerns include low household spending, minimal private investment, and agricultural slowdowns. Job creation remains a challenge, contradicting the jobless growth narrative.
Sectors such as construction and tourism are highlighted as major job creators, indicating that growth does contribute to employment.
India’s path towards becoming a global economic powerhouse reflects its strategic policies and ability to navigate international changes.
Despite this, it’s important to consider the full economic landscape, including areas that need improvement.