Over four in 10 Indians — or more than half a billion people — are struggling to afford food, and almost as many are having trouble affording shelter. India’s economy is the fastest growing in the world, fueled by high public spending, strong urban demand and foreign investment. The Indian economy is currently facing a number of challenges. These include high levels of inflation, an unstable rupee, and a large current fiscal import export deficit. In addition, the country faces significant infrastructure needs and a growing population that is increasingly young and educated increasingly unemployed or unemployable lacking fundamental skills. Every year, a list of countries with rankings and indices for various criteria is released by a different organization or agency.
An extensive analysis of skills worldwide may be found in the Coursera Global Skills Report 2022. India’s overall skills competency is now ranked 68th globally, down four spots from its previous position. India is now ranked 19th in Asia. The countries are ranked according to its environmental performance and sustainability using the Environment Performance Assessment, a biennial index. India received a score of 18.9, placing it 180th overall in the Environmental Policy Index 2022. India is ranked lower than Pakistan, Bangladesh, Viet Nam, Myanmar (19.4), and Bangladesh (23.1). Denmark tops the list with a score of 77.9, followed by the United Kingdom (77.7) and Finland (76.5). India rankings in basic crucial indexes is consistently under strain whether it’s happiness level, corruption index, press freedom falling every year, corruption index, manufacturing index moreover it’s democratic indexes are all under strain putting it’s economy in strain. India is growing economically without job growth.
According to the United Nations Conference on Trade and Development, India rose one spot to seventh place among the top recipients of foreign direct investment (FDI) in the most recent calendar year (2021), despite a decline in FDI inflows into the nation. The US, Spain, France, Germany, Switzerland, Austria, UK, Singapore, and Italy round out the top ten, with Japan at the top of the global charts. India is ranked 107th out of 121 nations in the Global Hunger Index 2022 (down from the index of 101 in 2021). Every October, Concern Worldwide and Welthungerhilfe jointly produce the report.
Indian authorities are downplaying inconvenient macroeconomic facts so that they can celebrate seemingly flattering headline figures ahead of hosting the G20 summit. But in covering up the growing struggles faced by the vast majority of Indians, they are playing a cynical and dangerous game. Behind the billboards in Delhi advertising this month’s G20 summit are slums whose residents can no longer earn a living. Their roadside stalls and shops have been demolished, lest they tarnish Prime Minister Narendra Modi’s carefully curated image of a rising India. India’s GDP statistics are also on display as part of this “branding and beautification” exercise. With an annual growth of 7.8% in the second quarter of this year, India appears to be the world’s fastest-growing major economy. But, again, behind the billboards are human struggles on a massive scale. Growth, in fact, is low, inequalities are rising, and job scarcity remains acute.
The G20-inspired billboards touting India’s latest GDP figure include a mysterious line about “discrepancies.” The estimates of income and expenditure differ in national accounts in many countries because they are based on imperfect data. Typically, this discrepancy does not matter for calculating growth rates, because income and expenditure, even if they differ somewhat, have similar trends. The Indian National Statistical Office’s latest report is a case in point. It shows that while income from production increased at an annual 7.8% rate in April-June, expenditure rose by only 1.4%. The entire point of the discrepancy line is to acknowledge statistical imperfections, not to make them disappear. The NSO is covering up the reality of anemic expenditure at a time when many Indians are hurting, and when foreigners are showing only a limited appetite for Indian goods.
The Australian, German, and UK governments adjust their reported GDP using information from both the income and expenditure sides. The United States uses expenditure as its primary metric of economic performance (unlike income in India), the US Bureau of Economic Analysis accounts for the often sizable difference between income and expenditure by reporting the average of the two as its composite measure. When we apply the BEA method to Indian data, the most recent growth rate falls from the headline 7.8% to 4.5% – a marked decline from 13.1% in April-June 2022, when the post-COVID-19 rebound first triggered the current wave of India hype. Those inequalities are reflected in the increased import content of domestic expenditure, which is up from 22% before COVID to 26%. With the help of an overvalued exchange rate, rich Indians are buying fast cars, gilded watches, and designer handbags – often on shopping sprees in Zurich, Milan, and Singapore – while the vast majority struggle to buy common necessities.
The Indian economy is failing to create jobs, especially those that would support a dignified standard of living. Apart from public administration, the most rapid income growth by far this past quarter (at 12.1%) was in finance and real estate. The Indian development, now augmented by “fintechs,” generates only a handful of jobs for highly qualified Indians. Public administration also is growing robustly, but this, too, creates only limited job opportunities. The manufacturing sector the primary source of employment in every successful developing economy. Following decades of disappointing growth, India’s post-COVID manufacturing performance has been particularly weak. This reflects the country’s chronic inability to compete in international markets for labor-intensive products – a problem made worse by the slowdown in world trade and weak domestic demand for manufactured products, owing to appalling income inequality.
Indian authorities are choosing to dismiss inconvenient facts so that they can parade seemingly flattering images and headline figures. Indian government is playing a cynical, dangerous game. Slippery national account statistics betray a desire to wish away slowing growth, rising inequalities, and grim job prospects. The authorities would do well to recognize – and reconsider – the path they have set India on.