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Issue 6

India and the World: Looking into 2021

Karantaj Singh

India has witnessed economic downturn, unemployment and a pandemic. What does India’s economic standing mean for its position in the world?

“I firmly believe that 2020 will be known, not as a year of external disruption, but as a year of internal discovery, for our society and for our nation,” 

Prime Minister Narendra Modi wrote these words for an exclusive article in the Manorama Yearbook 2021. While his words were meant to bring hope for India in times of crisis it also raised questions of how the pandemic altered the country’s position in the international community. 

Claims that India will be a superpower by 2020 have been thrown around by academics, economists and patriotic bhakts for over two decades. These claims can be traced back to India 2020: A Vision for the New Millennium by APJ Abdul Kalam. In this book Kalam laid down his prediction of an India that would have eliminated poverty, have a high amount of women in the work force and would be an economic giant by the year 2020. These predictions could now be considered optimistic at best and completely delusional at worst. 

Coming into 2020 it was quite apparent that we hadn’t even touched the surface of becoming a poverty free nation. The World Economic Forum (WEF) released a report in January 2020 claiming that it will take seven generations for Indians born in low income families to even approach the country’s mean income. The 2020 Global Multidimensional Poverty Index (MPI) identified 27.9% of the population as multidimensionally poor,  the number was 36.8% for rural and 9.2% for urban India. Even promises about the increasing involvement of women in the workforce has proved to be quite inaccurate. India’s female labour force participation rate fell to a historic low in 2018.  India is currently the most disadvantaged country for women participation in South Asia. Economic predictions about India becoming a super power also seem like a big joke. Coming into 2020 the country’s 5% inflation-adjusted growth was the lowest since 2013 and the 7.5% nominal rate was the lowest since 1978. The country that once had one of the fastest growing economies, has not seen success over the last few years mainly due to several blunders in national economic policies and actions. 

While the above numbers may just seem like confusing statistics they shed light on a much larger issue the Indian economy needs to counter. Low participation of women in the workforce doesn’t just shed light on the gender disparity that is evidently prevalent in the Indian patriarchal structure, but also showcases wastage of a large chunk of the country’s working population. 

A high poverty rate in the country’s population is a clear result of poor fiscal management on part of the government. The fact that a majority of the country’s workforce is employed in a sector that contributes the least to its GDP should be a clear indication that the Indian economy is in desperate need of a transformation. The record low inflation rates shows that the country is displaying minimal growth. All of these indicators point to one answer – India is nowhere close to being a developed nation.

India stepped into 2020 with an economic slowdown characterised by high poverty rates and increasing unemployment. The country was in turmoil as mass protests broke out in all states surrounding the people’s outrage towards the government’s discriminatory citizenship laws (NRC/CAA). This year was also not free of obstacles for the country, the biggest obstacle obviously being the COVID-19 pandemic. The Indian economy that was already suffering before the year started has taken massive hits, as the country has now officially entered a technical recession. The country is now faced with farmer protests due to the government’s new Farm Bills that potentially threaten the stability of their income. So what does all this mean for India’s position in the world?

The Indian economy took a larger hit than any other major economy. In the April-June quarter, the country’s GDP shrank by 23.9% , the worst contraction in its history. India also entered a technical recession for the first time since 1947. The International Monetary Fund (IMF) calculations showed that the Indian economy had taken a “uniquely” larger hit than most other countries. While their 2020 growth projections showed upward trends for countries like Bangladesh, China and Vietnam, India’s GDP dip due to the pandemic was more than double the global average fall. Infact China’s trade surplus widened to a record, gaining a 21% increase (for the month of November) in exports from a year earlier. 

The Modi government has tried to ensure the public that this fall in the GDP is temporary and promised that the economy will rebound rapidly, calling it a “V shaped recovery”.  In reality though this is quite unlikely. Sabyasachi Kar’s model predicts that it will take up to 2033 for India to get back on the pre-Covid growth path if the country’s GDP grows at a rate of 7% for the next 13 years. Another projection made by scroll.in shows that if India’s GDP grows at a realistic 6.1% instead of Kar’s 7% estimate, it will take almost three decades (upto 2049) for the country’s GDP to get back on a growth path. While the Indian government is planning on introducing policies to ensure growth, the country’s standard growth policies are being ineffective. States across the country are seeing a reduction in their capital expenditures (CAPEX) , this is mostly due to the fall in revenue due to the pandemic. This reduction in revenue and CAPEX basically means that the government isn’t investing close to enough money on roads, energy plants and other necessary infrastructure. An increased investment in infrastructure is peremptory if the country is to get back on its feet, and the current spending capacity of the states is only going to make post covid recovery much harder. 

Nirmala Sitharaman had stated that the COVID-19 pandemic was an “Act of God” which may result in a contraction in India’s growth. But India’s position as a potential superpower has been threatened for the last 6 years, and the pandemic has only acted as a catalyst for an economy that was already crumbling. While we can try to stay optimistic and hope that the government’s plans pay off, it’s almost impossible that the country can get back to the growth it enjoyed in the 1990s and 2000s.

Karantaj Singh finished his undergraduate in History and International Relations. He is now pursuing a minor in Media Studies and Politics during his time at the Ashoka Scholars Programme. He enjoys gaming and comics in his free time.

Picture Credit: “India Map 2 N” by Mark Morgan Trinidad A is licensed under CC BY 2.0

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

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