India’s economic slowdown
January 16, 2020 - Prime Minister Narendra Modi’s pledge to turn India into a $5 trillion economy by 2024 – eclipsing the U.K. and Germany – needs gross domestic product (GDP) to expand at more than 11 percent for the next four years -- more than double the five percent estimated by India’s Central Statistics Office (CSO) for fiscal 2019-20.
The CSO estimate puts the country’s growth at its slowest pace since the global financial crisis of 2008-09. Former Reserve Bank of India governor Raghuram Rajan has called for significant reforms to boost India’s economy.
“We have a lot of young people entering the labour force. We need to provide jobs for them, and even if much of the growth is job-oriented, five percent doesn’t cut it,” Rajan said during an interview with CNBC on January 13.
In May last year, Rathin Roy, then a member of Modi’s Economic Advisory Council, warned that India’s growth is faltering at lower-middle-income levels -- defined by the World Bank as per capita income between $1,026 and $3,995. “No country which has been in a middle-income trap has been able to come out of it,” Roy warned.
India’s per capita income is about $2,000 a year -- trailing Indonesia, where per capita income is at $3,900, and dwarfed by China’s $9,800, South Korea’s $31,000 and the U.S.’s $62,600.
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