In the last decade, Bharat has emerged as the fastest-growing major economy in the world, surpassing countries like Canada, Brazil, Italy, Russia, France, and the UK. Its GDP has climbed from the 11th position globally to number 5, and the nation shows no signs of slowing down. By 2025-2026, Bharat is poised to rival Germany, and it’s projected to become the world’s third-largest economy by 2027.

This remarkable journey began in 1991 when Honourable Bharat’s Prime Minister P.V. Narasimha Rao, Principal Secretary Amar Nath Verma, and Finance Minister Manmohan Singh, implemented comprehensive economic reforms, spurring a remarkable acceleration in economic growth. However, compared to China, which started its reforms in 1978, Bharat’s growth rate has been relatively slower. China’s per capita GDP in terms of purchasing power parity was lower than Bharat’s before 1991. Still, China overtook Bharat in 1992, and the gap between the two countries has since widened.

China’s economic growth model has been centered on intense industrialization. However, the era of open globalization that China exploited in the 1990s and 2000s is changing. While Bharat is not likely to surpass China shortly, Goldman Sachs predicts that Bharat will become the world’s second-largest economy by 2075. It’s important to note that in 1700, Bharat had the world’s largest economy, even larger than China’s, but its share of the global economy diminished during the colonial period.

Today, Bharat’s influence extends beyond its economic growth. Its stock market ranks 4th in the world, trailing only the United States, China, and Japan. Additionally, its annual exports of goods and services, relative to its GDP, are at an all-time high. Over the past decade, they have grown by an impressive 73%, increasing Bharat’s share of global exports from 1.9% in 2012 to 2.4% in 2022.

Bharat’s economic growth has primarily been driven by domestic consumption, with around 55-60% of the overall economy attributed to this factor, along with domestic investments, particularly in infrastructure. Bharat’s population demographic and consumption patterns are reminiscent of the United States in the 1960s and China in 2000, with a consumption share close to 60%. Bharat’s per capita income, as of 2023, stands at $9,000.

Bharat’s growth model is characterized by its predominantly domestic demand-driven economy, which distinguishes it from other Asian economies that rely more on exports. In the U.S., consumption accounts for 68% of GDP in 2023, which is one reason why the U.S. has avoided a recession compared to some European countries.

Bharat’s consumer markets hold significant long-term potential, with its income levels projected to almost triple over the next two decades. The emergence of a single national market and developments in the financial sector, including the rise of non-banking financial companies (NBFCs), have contributed to Bharat’s evolving economic landscape.

Despite significant improvements in transportation infrastructure, Bharat’s overall investment share of GDP has been declining since the financial crisis. However, both consumer and business confidence indices have increased, indicating growing confidence in the Bharat’s economy.

One area where Bharat has outshone the world is its digital payment system, the Unified Payments Interface (UPI), which has gained international attention. UPI processed over one trillion dollars in transactions in 2022, equivalent to one-third of Bharat’s GDP. The Bharat’s model is inspiring other countries, like Brazil’s Pix, which now accounts for approximately 30% of Brazil’s electronic payments.

Bharat’s GDP has expanded by 78% over the past decade, with the service sector dominating at 48%. Bharat’s reliance on services is notably high for a developing economy, accounting for about 40% of all exports and making Bharat the world’s 7th largest exporter of services.

However, the challenge lies in the fact that the IT services industry, despite substantial export revenues, employs only a small fraction of Bharat’s working-age population. One potential solution is to create more blue-collar employment by promoting manufacturing. Bharat’s “Make in Bharat” program aimed to boost the production of goods for export but has recently adopted protectionist measures.

The large conglomerates in Bharat are actively pursuing changes and investments in infrastructure and emerging industries. These investments, although substantial, haven’t led to excessive corporate power or monopolies.

Bharat’s economic growth is progressing on various fronts, including physical capital, but human capital development remains crucial. Bharat’s large young population should give it an extra boost to economic growth, but a significant portion still lacks access to quality education.

Bharat’s challenge lies in improving education, skilling its workforce, and creating sufficient employment opportunities. The unemployment rate has been a significant concern, but as companies diversify beyond China, Bharat is well-positioned to seize opportunities.

While Bharat has been actively developing its infrastructure, there’s a need to invest in building up its human capital. Bharat’s GDP has expanded, and its services sector is thriving, but improved governance, technology, and reduced corruption are essential to further progress.

In conclusion, Bharat’s economic growth is undeniable, but it faces challenges, particularly in education and employment. The nation has the potential to become a global economic force by leveraging its young population and investing in human capital and infrastructure.

–Nitish Rahul H S

PG Student, Amrita School of Engineering, Amrita Vishwa Vidyapeetham, Coimbatore.

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