India’s Boom Is a Dangerous Myth
Indian elites, official forecasters, and international media have piled into the narrative that India’s economy is booming and positioning the country to become the great success story of the twenty-first century. But looking past the illusion created by headline GDP numbers, nothing could be further from the truth.
PRINCETON – Indian elites are giddy about their country’s economic prospects, and that optimism is mirrored abroad. The International Monetary Fund forecasts that India’s GDP will increase by 6.1% this year and 6.8% next year, making it one of the world’s fastest-growing economies. Other international commentators have offered even more effusive forecasts, declaring the arrival of an Indian decade or even an Indian century.
In fact, India is barreling down a perilous path. All the cheerleading is based on a disingenuous numbers game. More so than other economies, India’s yo-yoed in the three calendar years from 2020 to 2022, falling sharply twice with the emergence of COVID-19 and then bouncing back to pre-pandemic levels. Its annualized growth rate over these three years was a feeble 3.5%, about the same as in the year immediately preceding the COVID crisis.
All forecasts of higher future growth rates are extrapolating from the latest pandemic rebound. Yet, even with pandemic-related constraints largely in the rearview mirror, the economy slowed in the second half of 2022, and that weakness has persisted this year. Describing India as a booming economy is wishful thinking clothed in bad economics.
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