The rise of India to become the sixth largest economy in 2017, surpassing France is no mean achievement. Measured in current US dollars, India’s economy was an estimated 0.6 per cent larger than of France. There is now great anticipation that India will soon become the fifth largest, surpassing the UK whose economy is struggling since the Brexit vote. The British economy has been shrinking since 2015. That has already narrowed the difference in size of the economies of the UK and India. And, so UK’s economy, which was about 50 per cent larger than India’s in 2014, in current US dollars, was only one per cent bigger in 2017.
While policy makers and others will rush to claim credit for the improvement in India’s rank, what should matter more is the economic prosperity of the people of the country and their ability to live a comfortable and healthy life. On that count, India has multiple challenges to overcome. The country ranked 144, with per capita GDP of the $1,940, and that is just five per cent of the per capita GDP of France. Comparisons with China too show how poor an average Indian is — India’s per capita GDP is just one-fifth of China’s.
While higher GDP rankings are welcome, policy makers need to focus on increasing incomes of the people, particularly those living below the poverty line. For this, people at the bottom of the pyramid need to have access to better and sustainable livelihood opportunities. Along with raising income levels, reducing out-of-pocket expenses on healthcare and education, by raising the quality and delivery of the public health and education systems will leave more money in the hands of the poor, allowing them to increase their spending on food, better housing and various goods and services, all of which will contribute to their well-being.
Increased demand for goods and services, in turn, will create more demand and more employment in the economy and lead to more growth. That done, rankings will have only one direction to move — Up.