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Barclays Plc has highlighted the crucial need for India to achieve a minimum of 8% annual economic growth in the upcoming decade if it wants to surpass China as the world’s leading economy. The reason behind this is clear-cut – China’s economy remains significantly larger than India’s, and in order to bridge this gap, India must grow at a faster pace than its neighbor.

When comparing the GDP of the two countries, it becomes evident just how substantial this disparity is. In 2022, China’s GDP stood at USD17.7 trillion, whereas India’s GDP reached USD3.3 trillion. This means that China’s economy currently exceeds India’s by over five times its size.

While China is indeed experiencing growth, it is now at a slower rate compared to previous years. The International Monetary Fund (IMF) estimates that China’s economy will expand by 5.1% in 2023-24, considerably lower than its average growth rate of 10% observed over the past three decades. Nevertheless, this growth rate is still commendable.

India must expedite its growth to outpace China and narrow the gap significantly. To surpass China as the world’s leading economy, Barclays suggests that India must achieve a growth rate of 8% per annum over the next decade.

However, India will encounter a number of hurdles in its pursuit of sustained 8% growth:

1. Infrastructure bottlenecks: Inadequate infrastructure development could hinder India’s economic growth potential.
2. Complex regulatory environment: The intricate nature of India’s regulatory framework might pose challenges for businesses and hinder growth opportunities.
3. High poverty levels: India’s high poverty rate could curtail domestic demand and restrict overall economic growth.

Despite these challenges, India possesses several inherent advantages that could contribute to achieving the targeted 8% growth:

1. Young population: With a median age of 28.7 years, India boasts a large pool of productive workers.
2. Expanding middle class: India’s middle class is expanding rapidly, which in turn creates a substantial domestic market for goods and services.
3. Government reforms: The Indian government has implemented a series of reform measures in recent years to enhance the business environment and bolster economic growth.

If India can surmount these obstacles and maintain consistently robust economic growth rates for the next few decades, it has a chance of supplanting China as the world’s largest economy. However, it is important to acknowledge that achieving 8% growth is an immensely ambitious target, as India has never sustained this level of growth over an extended period of time in the past.

http://blog.fcsdindia.org/2023/10/indias-ambitious-growth-journey.html