Modi’s economy is growing fast. And it is expected to grow even faster in the near future, beating China’s
By Panos Mourdoukoutas
That’s according to the recently published IMF World Economic Outlook, which predicts that India’s economy will grow at 7.3% in 2018 and 7.4% in 2019, up from 6.7% in 2017. Meanwhile, China’s economy will grow at 6.6% in 2018 and 6.2% in 2019, down from 6.9% in 2017see table 1.
Table 1
India’s Economy Is Expected To Beat China’s In 2018-19
Country 2017 2018 2019
China 6.9% 6.6% 6.2%
India 6.7 7.3 7.4
Emerging and developing Asia 6.5 6.5 6.3
IMF attributes India’s strong growth to Prime Minister Narendra Modi’s policies, like the implementation of the National Goods and Service Tax and the Insolvency and Bankruptcy Code. Then there are market liberalization measures, which have helped India climb in a number of global rankings, including World Bank’s 2017 ranking of “ease of doing business,” where India climbed from the 130th position in 2016 to the 100th position in 2017. And the world the World Economic Forum’s (WEFR) Global Competitiveness rankings, where India climbed 20 points in the last four years.
But there’s something striking about Modi’s policies. While they have been making the economy better, they’re making Indians worse off. In fact, as the Indian economy has climbed the world economic ladder, Indians have been headed the other way, taking a few steps down on the life ladder.
That’s according to a Gallup survey last month, which finds that Indians’ ratings of their current lives nationwide are the worst in recent record, an average of4.0 on a 0-to-10 scale in 2017 down from 4.4 back in 2014. The findings of this survey are in line with a previous Gallup survey that finds a big decline in the percentage of Indians who rate their lives positively enough to rate it as “thriving” since Modi assumed office. Only 3% of Indians consider themselves thriving in 2017 compared to 14% in 2014.
There are good reasons for that. One of them is that the Living Family Wage in India remains almost flat in the 17300-17400 INR/Month range over his tenure. Meanwhile, wages paid to low-skilled labor decreased to 10300 INR/Month in 2018 from 13300 INR/Month in 2014.
Meanwhile, Indians have had a hard time buying food, especially in rural areas. “Beginning in 2015, rural Indians began reporting increased difficulty paying for food,” says the Gallup report. “That year, more than one in four rural Indians (28%) reported not having enough money to pay for food at some point that year (compared with 18% of urban Indians who reported the same hardship). It has increased every year since then, with 41% of rural Indians and 26% of urban Indians reporting inability to afford food in 2017.”
Obviously, India’s feverish economic growth and hot equity markets didn’t touch the masses of the Indian people. Modi has a lot of work to do to remedy this situation. Provided, of course, that he wins another term. I’m Professor and Chair of the Department of Economics at LIU Post in New York. I also teach at Columbia University. I’ve published several articles in professional journals and magazines, including Barron’s, The New York Times, Japan Times, Newsday, Plain Dealer, Edge Singa…