Economy, India: international comparisons

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Economic growth

2007> 2017: India 5th fastest, behind Ethiopia

February 5, 2018: The Times of India

State of the world's wealth, biggest gainers and top losers, February 2018
From: February 5, 2018: The Times of India

Vietnam grew rich the fastest in the past 10 years, India finished fifth behind Ethiopia

The combined wealth of people across the world is $215 trillion now — more than 11 times the US GDP. But some countries have grown richer much faster than others. Vietnam added wealth the fastest between 2007 and 2017, although China, a close second, impressed more by continuing to accelerate hard over its already impressive wealth base. India was a distant fifth, behind Ethiopia, while many European countries ended the decade poorer than they were before the start of the financial crisis in 2007. Among rich nations, Australia and New Zealand performed best, almost doubling their wealth in the period.

Prosperity Index

2016> 2017: Legatum

December 12, 2017: The Times of India

Score in Legatum Prosperity Index, India, Pakistan, and other countries
From: December 12, 2017: The Times of India

HIGHLIGHTS

The gap between China and India's prosperity has narrowed by four ranks since 2016.

The Legatum Prosperity Index is an annual ranking developed by the London-based Legatum Institute.

The gap between China and India's prosperity+ has narrowed by four ranks since 2016 and to a quarter of what it was in 2012, according to the latest Legatum Prosperity Index, an annual ranking developed by the London-based Legatum Institute.

The upward trend in India's prosperity is significant in view of the fact that India registered lower GDP growth following demonetisation and implementation of the GST reform in 2017. India closed in on China+ through gains in business environment, economic quality and governance, the report said.

The Legatum Institute applauded India for improving governance by legislation "that increased the ability to challenge regulation in the legal system". The report attributed the gains in business environment and economic quality to improvement in intellectual property rights and massive rise in bank account holders.

The Prosperity Index determined by nine sub-indices — business environment, governance, education, health, safety and security, personal freedom, social capital and natural environment — is reviewed by a panel of academics from various disciplines and reputed schools like London School of Economics, Tufts University, Brookings Institution and University of California, San Diego.

In the 2017 Legatum Prosperity Index, based on 104 different variables analysed across 149 nations, India has significantly improved in the economic quality and education pillars. "More people are now satisfied with their standard of living and household incomes," the report said.

China, according to the report, has lost out "economically as people perceived greater barriers to trade and less encouragement of competition; and educationally through a falling primary school completion rate".

Overall, world prosperity increased in 2017 and now sits at its highest level in the last decade even as the world went through turbulence due to terrorism, war against Islamic State and displacement of massive number of people in West Asia and North Africa. The global prosperity is now 2.6% higher than in 2007. While prosperity improved around the world in 2017, no region grew as fast as Asia-Pacific.

The Asia-Pacific region, which includes China and India, registered greatest improvement in business environment and worst performance towards natural environment.

Trade

1990-2016: Trade as percentage of GDP- India, China and the USA

January 22, 2018: The Times of India

Trade as percentage of GDP, India, China and the USA, 1990-2016
From: January 22, 2018: The Times of India

See graphic:

Trade as percentage of GDP, India, China and the USA, 1990-2016

One of the measures of globalisation is trade (export and import) as percentage of GDP. In 1990, trade accounted for only 15 per cent of India's GDP, nearly half of China's trade-GDP ratio. But the picture now is very different. In 2016, India's trade had risen to nearly 40 per cent of GDP, whereas it was only 37.05 per cent in the case of China, and this despite a slight drop in trade.

Of course, in the case of China, trade peaked at 63 per cent of GDP before falling again, reflecting a change in the structure of the economy towards being more driven by domestic demand. Wonder what finance minister Arun Jaitley has in store in Budget 2018 to give a leg up to both trade and domestic consumption?