Name: Shobhit Shukla Submitted To: Prof.

Rohit Jadhav
Div.-B Enrolment Number:2019080 Economics- III, Third Semester

Mid-Semester Examination

1. Critically analysis the India’s performance among world’s top countries? And
also explain the comparisons of India and china’s GDP Growth?

As it can be seen from the graph, India is the fifth largest economy in the world. It's GDP
in 2017 was 2.7 trillion dollars and the same was constantly maintained in 2018.
However, in 2019 an increase is seen in the GDP of India to 2.9 trillion dollars. Arrow
indicates that India's position has changed in 2019. This means that India was initially the
6th largest economy in the world till 2018 but in 2019, it surpassed United Kingdom to
become the fifth largest economy in the world. India is the fastest growing economy in
the world, with an enormous population, favourable demographics and high catch-up
potential due to low initial GDP per head.

According to World Economic Outlook report of IMF, India's economy is expected to

grow by 7.5 % in the 2019-20 fiscal year, keeping an upward trajectory as the rest of the
world slumps. As per Central Statistics Office, Ministry of Statistics and Programme
Implementation, the growth in GDP during 2018-19 is estimated at 7.2 % as compared to
the growth rate of 6.7 % in 2017-18. As per the World Bank data, in 2017, India became
the sixth largest economy with a GDP of USD 2.59 trillion, relegating France to the
seventh position. India was an agrarian society but after independence, India has climbed
up the ladder and developed the manufacturing and tertiary sector and has become the
fastest growing tertiary sector. The growth of manufacturing and majorly tertiary sector
determines a country’s overall economic growth.

Considering this, India has increased its GDP which was constant in 2017 and 2018 at 2.7
later, increased to 2.9 in 2019 due to which there was a change in position and rank of
India. India due this very factor and growth in GDP improved its position and thus,
ranked 5th worldwide in economic growth. It can be seen in the graph that UK as well as
France which are one of the most developed nations of the world and economically
capable, their positions declined in the above graph and statistics.
UK and France both firstly increased their GDP to 2.8 in 2018 from 2.6 in 2017, then
decreased to 2.7 in 2019. According to me, a stable growth such as of an India ensures
long term plan instead of a fluctuating or unstable growth rate like that France and UK. It
can be seen in the graph that it is only India whose economy has ranked up a position
amongst the other top 10 economies, while the UK and France position’s declined. Rest
of the countries in the graphs haven’t showed any change in their position. With Covid
the situation has changed drastically, but India should strive to revamp all its sectors and
increase production to ensure high levels of production again.

As it can be seen from the graph, China maintains the second largest economy in the
world with high levels of GDP 2019 while India remains at the fifth position. China has
after 1978 encouraged the formation of rural enterprises and private businesses,
liberalized foreign trade and investment, relaxed state control over some prices, and
invested in industrial production and the education of its workforce. All of this has
resulted in extremely high levels of GDP as can be seen in the graph. Per capita income of
China quadrupled in the last 15 years. In 2017 it was 12.1% and it increased by 1.3 %, the
highest increase for the year 2018 to 13.4 %. In 2019 also, we see a remarkable growth of
0.7 % with China retaining the position of the second largest economy at 14.1 %, second
only to the USA. Before,1978 China had seen annual growth of 6 percent a year post-
1978 China saw average real growth of more than 9 percent. The return of the once-
dormant economies of China and India to dynamism and growth is one of the most
remarkable stories in recent history. The two countries are home to nearly 40 percent of
the world's population. In the past two decades, China and India have liberalized internal
economic policy, treatment of foreign investment, and trade, and have experienced
economic growth at sustained high rates. However, there are reasons why India’s
economy is smaller than China, some of them are listed below:

a. Dominance of Agriculture and Heavy Population Pressure on Agriculture - In

India, almost 60-70% of the total population still resides in rural areas and
hence they depend on agriculture for their livelihood.
b. Unbalanced Economic Development- According to latest data available about
64% of total labour force is dependent on agriculture, 16% on industries and
the rest about 20% on trade, transport, and other services.
 c. Low rate of capital formation- the amount of capital per head available is low;
and the current rate of capital formation is also low.
d. Lack of Infrastructure Facility- There is a lack of physical infrastructure (i.e.
road, electricity, banking) and social infrastructure (i.e. education, health,
housing, drinking water) that hinders the development process of a country.

Therefore, while economies of both the countries have increased, as can be seen in the
graph, however China has a higher GDP than India but India should strive to increase
production to remain on of the largest economies in the world.

2. Critically Analysis the situation of India’s GDP? Is it achievable?

The graph shows a consistent growth rate of India’s economy from $0.7 trillion in 2004-
05 to the latest GDP estimate for the current 2019-20 year yield a $2.9 trillion GDP. The
graph also highlights the optimistic target laid down by the Prime Minister, a bold plan to
make India a $5 trillion economy by 2024-25. However, less than expected growth of
India’s economy in its march to hit the $5 trillion target by 2024-25 (in under five years)
has made the target look ambitious, to say the least, the economy will now need nominal
growth in dollar terms of around 12% year, a giant leap from the current 6.8%. Is the
target achievable?

Given the recent domestic and global economic downturn, along with domestic market
uncertainty, the US-China trade war, the India-China proxy war, and the ongoing
pandemic, this debate is gaining more relevance. The ambitious target of $5 trillion GDP
was set before the COVID-19 pandemic. The onrush of COVID-19, followed by
the Janta curfew in the first quarter of 2020, has affected India’s target of $5 trillion GDP
negatively. Amid macroeconomic shocks and uncertainties, several domestic and
international institutions and rating agencies have issued updated GDP growth estimates
for 2020-21, showing the economic target of having a $5 trillion economy in 2024-25 to
be a distant dream. Likely, the subdued growth of the $5 trillion target trajectory in 2020-
21 will either devolve the growing pressure to subsequent years or move the target year to
a later period. The aggressive $5 trillion economic targets intend to provide stimulus in
the economy while raising several pragmatic challenges to achieve it. It is very important
to make quick and significant changes in the economy for India to even aspire to achieve
the target. India must however aspire to double-digit growth. This target can be
accomplished by providing an appropriate boost to the growth of productive sectors
which are drivers of the services-led Indian economy. Without continued growth at this
pace, it has little hope of employing the roughly one million young people who join its
workforce every month. However, unless it takes advantage of its current, favourable
demographics of the country is never likely to emerge as an upper-middle-income
economy with a prosperous and thriving population. This goal can be accomplished when
there is a rebound in the economy during the post-COVID-19 era, combined with steady
growth over the years in the productive sectors. The post-COVID-19 sectors of
agriculture, business and services must recover and at least demonstrate their respective
five-year growth. This growth trajectory reflects the continuity of the domination of the
GDP output from the services and industry sectors. They, however, need consistent
stimulus for growth. The dynamics with other sectors and their contribution to the
economy are equally significant, alongside the individual growth of a sector. This can be
accomplished by attracting foreign direct investment by strengthening regional innovation
systems that will, in turn, it would enable local businesses to move towards growth,
innovation, and internationalization.