Major findings of report
World Economic outlook is a semi- annual report, Published by International Monetary fund(IMF).
‘Navigating Global Divergences’ October 2023, has revised its projected GDP growth rate for India for 2023-24 to 6.3%.
The success is sweeter as the IMF revised downwards world GDP growth projection, including China’s by 0.3 percentage points, to 4.2%.
The economies that were worst affected during the COVID-19 pandemic were also the ones to record a steep recovery is widely acknowledged.
India, which was one of the worst affected, has followed the pattern.
During the second quarter of 2020, India’s GDP contracted by 25.6%, quarter on quarter,
The worst among the world’s major economies as reported by the then IMF Chief Economist, in a tweet on September 2, 2020.
The output contraction in 2020-21, at 8.5% over the previous year, was one of the worst among the world’s large economies.
Taking a slightly longer view, India’s real annual GDP growth rate slowed down from 6.8% in 2016-17 to 2.8% in 2019-20, immediately prior to the pandemic.
Real per capita income level in 2021-22, at ₹1.09 lakh, was higher than that in 2019-20 by about ₹600.
In the following year, 2022-23, recovery gained momentum as domestic supplies were restored and global supply chains were straightened out.
However, even focusing on output recovery, a sectoral view with trade dimension, would perhaps expose chinks on the armour, as detailed below.
Policymakers need to temper their optimism by taking a slightly longer view with a wider angle — appreciating the fast-changing geopolitical underpinnings of economic policy making
It perhaps bears repetition that 2022-23 heralded the end of globalisation with tectonic shifts in the world geopolitical order.
However, the immediate concern is India’s susceptibility to its soaring deficit with China.
India’s economic frailty has increased even as the net exports to GDP ratio has declined sharply.
India’s dependence on Chinese imports of manufactures seems structural, and not easily corrected by changes in relative prices.
The government initiated the Atmanirbhar Bharat Abhiyan, amidst the Galwan crisis to curb Chinese imports of critical industrial products.
China accounts 15%-16% of India’s imports and a third of India’s trade deficit.
The trade deficit continues to rise, however (“India’s Trade dilemma with China”, Pal and Ray, businessline, June 20, 2023).
Willy nilly, India undid many import restrictions, as domestic production was getting throttled for lack of critical Chinese inputs.
On social development, official spokespersons and critics have battled over the veracity of multidimensional poverty measure, and the unrepresentativeness of the Global Hunger Index.
The UN Development Programme’s Human Development Index may be more credible and an acceptable measure.
The value of India’s HDI index moderated from 0.645 in 2018 to 0.633 in 2021.
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