ASHOKA MODY
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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