We must expand India's economy but not as an end in itself
In the last week of 2023, India’s share in global market capitalization hit a record 3.8%, according to Bloomberg data, consolidating the country’s position as the fifth biggest equity market, just behind Hong Kong. In nominal terms, India’s GDP is also the world’s fifth largest (by purchasing power parity, or PPP, it is the third largest).
According to the International Monetary Fund (IMF), India will move into fourth place in 2025 and reach the third spot in 2027, with a projected economy of $5.4 trillion. Some might see this parallel between GDP and stock markets as further vindication of the IMF’s “star performer" tag.
Indeed, we have seen a reiteration of faith in the Indian economy by domestic and overseas investors, both of whom have been pouring money into our capital markets. Although it seems as if stock indices have run ahead of fundamentals at present, they must ultimately reflect the underlying strength or weakness of the Indian economy in the context of its future potential.
Our fifth position in global GDP league tables as well as the market value of all listed shares is a cause for celebration. It is a measure of how far we have come from the times when India’s plodding rate of growth in the pre-reform period was referred to derisively as “the Hindu rate of growth." Look a little deeper, however, and it is equally clear that we have no space for complacency.
For all the progress made in our 75-plus years as an independent nation—remember former British Prime Minister Winston Churchill’s scathing comment, “India is no more a single country than the equator"—we still have a long way to go. So, even as we overtake our former colonial master in economic terms, the dawn of 2024 is a good time for a reality
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