Japanese media: India may fall into the dilemma of “poor country”

Reference News Network reported on January 24, “Japan economic news” website published on January 17 entitled “India will rise, or become a poor country? 》The article points out that if economic growth is not sustainable, then population growth may in turn drag down India’s economy. The full text is excerpted as follows: India has not joined the regional comprehensive economic partnership agreement (RCEP), but is moving towards the idea of establishing an independent economic circle at home. Against the backdrop of antagonism with China, India’s goal is to embark on the road of boosting its local industry, but its concern about its isolated position in the world economy is hard to eliminate. In the near future, India’s population will surpass that of China and become the world’s most populous country. Its task is to develop local industries and increase employment opportunities. Otherwise, India may fall into the predicament of a poor country in the future. India’s cumulative number of new coronavirus infections, second only to the United States, has exceeded 10 million, and the process of economic recovery is very slow. From April to June 2020, India’s economic growth rate will be – 23.9%, which will shrink significantly among the major countries in the world. India’s poor have been hit hard. In India’s domestic market, the logistics of imported goods and agricultural products is blocked, which has an impact on the supply chain. In view of this situation, India has changed its industrial policy. “Make products made in India more popular.” Indian Prime Minister modi appealed to the public in a radio program at the end of December 2020. Modi put forward the idea of establishing an independent economic circle in India in mid-2020. The Indian government has also introduced a support mechanism, so that local enterprises in the fields of communication and automobile can enjoy special subsidies after increasing sales. Instead of joining the RCEP signed by 15 countries including Japan and South Korea in mid November 2020, India has adopted a policy similar to “locking up the country”. Why should India go against the multilateral trade framework and take a tough attitude towards China? I’m afraid the reason behind this is that India expects domestic demand to grow. It may be that it intends to avoid competition with other countries when the competitiveness of its manufacturing industry and other fields is weak, and is committed to exploring the domestic market. According to the United Nations, India’s population will increase to more than 1.5 billion by 2030. Some people think that if India’s middle class rises with population growth, then India’s domestic demand will further expand. First, local enterprises produce products that meet the needs of the Indian market, and then export them overseas after the improvement of commodity development capacity and price competitiveness. From India’s policy, we can see that India is ready to implement such a strategy. The prerequisite for the implementation of the above strategy is that India’s economy continues to maintain a high growth trend. From 2014 to 2017, India’s economic growth remained at a high level of 7% to 8%. Judging from the growth rate in this period, the view that India’s middle class will rise is convincing enough. However, later, the business crisis and non-performing debt problems of non bank financial institutions surfaced. India’s economic growth rate dropped sharply to 6.1% in 2018 and further to 4.2% in 2019. According to the forecast of the Central Bank of India, the economic growth rate in 2020 will be negative 7.5%, which is the worst level in history, and it is not clear when India’s economy will recover. If economic growth is not sustainable, then population growth may in turn drag down India’s economy. According to data from covid-19 survey, in less than 1 billion 400 million of India, the unemployment rate in April 2020 was more than 25%, and about 120 million people were unemployed. The unemployment rate will also reach 9% in December 2020, and personal consumption will be stagnant. According to world bank data, India’s working population over 15 will grow at a rate of about 1.3 million per month by 2025. With the rapid growth of the labor force, to stabilize the employment situation, 8 million new jobs are needed every year. The world bank has sounded the alarm that if this condition is not met, India may suffer from “low growth without employment”. According to the estimation of the world bank, India’s per capita GDP in 2019 is only about US $2000, which belongs to the backward group. If India’s economy keeps low growth in the future, it may fall into the predicament of a poor country with no increase in employment and wages and only population expansion.

(editor in charge: Zhu Xiaohang)


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