Growth slowdown of India- 4.5% is equal to 7%

Today everyone is talking about India’s growth slowdown. But the question is should Indians really worry about it? It depends on your perspective. For example if there is water in a glass, some people will say it is half-filled others will say it is half-empty. Let’s look at the recent growth rates of some of the countries

U.S.A- 2.1%

China- 6% (lowest growth rate in 27 years)





India-4.5% (lowest growth rate in 5 years)

No major country is growing as fast today as it was in the  last decade. Not one is growing faster than 10% ,the rate the Asian miracle economies sustained during the golden age between 1950 to 2007. National discussions are done on what must be done to revive growth, even the slowdown is driven by global forces beyond any one government’s control. We should rethink our definition of economic success and failures. Projections for 2040 shows China’s working age population falling by 114 million to around 900 million, Japan’s by 14 million to around 60 million. With shrinking labour force, these economies will inevitably slow down, and at times contract. Now the focus should shift to measuring per capita income growth rather than GDP. In countries with shrinking population per capita income can continue to grow so long as the economy is shrinking less rapidly than the population. Before it was common for one in every five economies to be growing at 7% or more. Now among the world’s 200 economies only 8 are on the track to grow 7% this year and most of them are small economies in Africa. Every country needs to rethink its definition of success. The benchmark for rapid growth should come down to 1-2% for developed economies, 3-4% for middle income countries. For emerging nations 4.5% is the new 7%.

Soumya Bhattacharyya

PGDM Batch- 2019-21

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