For over a century the United States has been the largest economy in the world. Major shifts have however taken place in the last two decades. During the last 30 years the weight of the world economy has shifted from the US and the rich countries of Europe to China and India.
Of late, economists of all hues have been unanimously proclaiming the emergence of India and China as economic superpowers in the not-too-distant future. The World Bank says India will become the third largest economy after China and the US by 2025.
World Bank Managing Director Graeme Wheeler who was in India recently noted India’s tremendous progress in recent years and emphasized the need for sustaining the growth in high-value sectors along with strides in the healthcare and education sectors.
Clyde Prestowitz in his book, Three Billion New Capitalists? The Great Shift of Wealth and Power to the East: writes, “that by 2030, India will overtake Japan in absolute dollar terms, not PPP, and in the second half of this century will be the largest economy. The really long-term miracle in India will come about because of demographics. China’s one-child policy will ultimately result in a reduced, and ageing, workforce.”
According to Wikipedia encyclopedia, “India’s current economic growth (as the world’s second-fastest growing major economy) has improved its standing on the world’s political stage, even though it is still a developing country, but one that is showing strong development. Many nations are moving to forge better relationships with India”.
The last annual CIA Report says The economy of India is currently the world’s fourth largest in terms of real GDP (PPP) after the USA, the People’s Republic of China and Japan, and the second fastest growing major economy in the world, averaging at an annual growth rate of above 8%. Its record growth was in the third quarter of 2003, when it grew higher than any other emerging economy at 10.4%.
Interestingly, estimates by the IMF shows that by 2007 India will be the third largest economy in the world, overtaking the Japanese economy. Also the growth rate is likely to gear up above 8% in terms of GDP (PPP).
The annual Asian Development Report of 2003-2004 has mentioned that Primary Sector wise India is growing at 8% per year is the world’s second largest producer of food next to China. Food processing accounts for USD 69.4 billion as gross income. Secondary Sector wise India is still relatively a small player in manufacturing when compared to many world leaders. Some new trends suggest an improvement in future. Tertiary and Quaternary Sector wise India currently has an expanding IT industry which is considered one of the best in the world. Some have begun to describe India as a technology superpower.
A recent Report of the Foreign Office of the United States of America has conclude that the rich countries of Europe have seen the greatest decline in global GDP share by 4.9 percentage points, followed by the US and Japan with a decline of about 1 percentage point each. The report further says Within Asia the declining global share of Japan since 1990 has been more than made up by the rising share of China and India. Between 1975 and 2002, Japan’s share of world GDP fell by 1 percentage point while that of South Korea, ASEAN, India and China rose by 1 percentage point, 1.2 percentage points, 2.2 percentage points and 9.2 percentage points, respectively.
As the share of the US in world GDP falls (from 21 per cent to 18 per cent) and that of India rises (from 6 per cent to 11 per cent in 2025) making India the third largest economy by 2025. By 2025 the Indian economy is projected to be about 60 per cent the size of the US economy. This transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe.
Various Reports of the FBI mentions that if things go fine in India she might overtake China by the mid of this century and might emerge as the largest economy of the world by then .The way the Indian economy is going that possibility doesn’t look unlikely.
To look into this one finds the answer in the book of Prestowitz where he says the big story between now and 2025 is going to be China but after that, it will be India. “Indian demographics are pretty powerful. Half the Indian population is under the age of 20. Whereas China will age rapidly in another 10-15 years, India doesn’t age very much at all. India will surpass China in population somewhere around 2030, so in the latter half of the century India is likely to be the biggest economy. I know there’s still something of a socialist hangover in India but it’s very much a capitalist economy, one which is driven by entrepreneurs rather than government fiat, which is still very much the case in China.”
Perhaps that distant dream of regaining her past glory as the number one in terms of knowledge and economic power by then will come true. Only time will predict this.
Dr Suvrokamal Dutta
(The Writer is a renowned Foreign affairs and Economic Expert)