November 8, last year will always be remembered for Prime Minister Narendra Modi’s landmark announcement of banning the higher currency notes. The apparent motive behind this move is to curb corruption and hoarding of black money. This move has also catalyzed in shaping the victory of the ruling BJP in the biggest and politically most important state of Uttar Pradesh. Whether, this has curbed corruption or not is debatable, but this has certainly done harm to the country’s economy.
The cancelation of the paper money has dislodged India from the top most position amongst the big economies in terms of annual growth rate, according to International Monetary Fund (IMF). The growth rate of India in 2016 had been 6.6 % compared to 7.6% of 2015, according to World Economic Outlook. They have estimated that in 2016, China has piped India with 6.7% growth rate. Although IMF predicts that Indian economy will bounce back and it will again regain its position to be the fastest growing economy, what these institutions failed to mention is that the growth rate of India is on a much smaller base than China’s. This essentially indicates that even if China’s GDP growth rate is lower than India, since the growth rate of China is measured on much bigger base, in absolute term, the monetary value of the goods and services produced in China is still much higher than India. As per 2014 statistics, India’s GDP has crossed 2 trillion marks in US Dollars, while China has crossed 10 trillion marks. Therefore, despite the rhetoric of the Indian politicians and the media alike, there is no comparison between the two.
The rhetoric of India being the highest growing economy is made easy with the covert support of the Western world and the financial bodies such as World Bank and IMF. It was been almost unanimously decided by the NATO countries that India will be put against China to contain the latter. The result is the media support of the West in favor India, vis-à-vis China. However, despite the media attention, India’s economy lies in the 9th position, while China’s is in the second position (in nominal terms). It is time for introspection, where the Indian establishment, instead of hiding behind the rhetoric, should steer the nation into a high growth rate zone and compete China economically with hard figures.