Can India Overtake the US and China as the Strongest Economy

you are watching places every Tuesday we bring you an insightful look into fascinating events from all around the world can India overtake the US and China as the strongest economy welcome to a Lux calm the place where future billionaires come to get inspired hollow a lakh sirs and welcome back the US and China tend to dominate conversations when it comes to the strongest economies in the world but India is starting to change up the focus based on their incredible economic growth over the past decade and their limitless potential for the future but is it realistic to think that India which some still consider to be a developing nation could overtake the most dominant country in the world and the world's top producer any time in the near future today will consider this possibility and look at several factors that will either push India in that direction or caused it to fall back but first a little background introduction since 1871 the United States has held the position of the largest economy in the world in 2018 America crossed a new threshold with a GDP that totaled over 20 point five trillion dollars China on the other hand is a newer player in the field of large economies having only claimed a second highest spot in 2010 their economy significantly trails that of the United States with a GDP in 2018 of thirteen point four trillion dollars if you travel further down the list past Japan Germany the United Kingdom and France you'll find India in seventh place with a GDP of two trillion dollars just looking at these numbers on the surface it seems ridiculous to ask whether India could overtake both the US and China not to mention the other four countries in between to become the strongest economy in the world but the real story here is found in the economic growth rates while the economy of the u.s. grew only 2.9 percent in 2018 China's grew by 6.5 percent and India had the fastest growing economy in the world with a 7 point 4 percent growth rate in 2018 these numbers gain even more significance when you realize that America's 2.9 percent grow rate is their highest in a decade while India on the other hand has led the world in economic growth rates for several years and is expected to continue to do so just one glance at this chart shows you how consistently India's economy has been growing but let's now take a look at how the Indian economy got to this position how India became one of the world's top economies India gained its independence from the United Kingdom in 1947 and quickly implemented a closed economy where they focused on providing for the country's needs without relying on imports many of the major industries including mining banking insurance and telecommunications were nationalized by the mid 50s when corruption became a problem the government over corrected by implementing strict regulations that stifled economic growth after decades of this stagnant economic growth and widespread poverty India found itself at a crossroads 1991 brought the collapse of the Soviet Union one of India's primary trade partners and the Gulf War raised oil prices and cut funds off from Indians who had been sending back money while working in the Middle East these were the main factors that brought India to the brink of financial crisis the country was in serious danger of defaulting on its loans they were bailed out by the International Monetary Fund with a 1.8 billion dollar loan under the condition they implement major economic reforms this led to the liberation of India's economy their markets were opened up to foreign competition and restrictions on foreign investment were eliminated this opened up opportunities for Indian entrepreneurs who now get funding from investors around the world a number of other regulations and restrictions were also eased in order to stimulate economic growth tariffs were reduced and monopolies were eliminated by 2003 India had established a free market economy and its GDP began to grow significantly year after year Indian entrepreneurs embracing the IT sector was a big part of this growth by 2007 revenues from the IT sector total twenty three point five billion u.s. dollars in 2018 revenues topped 167 billion from the IT sector alone the increase in technology-based businesses will continue to play a vital part in India economic growth but now let's see what else is working in India's favor reasons why India might become the largest economy India's primary asset is its people and the country has plenty of them with a population of over 1.3 billion people India comes behind only China on the list of the world's most populated countries but there is one important difference between the two countries populations India's people are generally much younger than China's aging population in fact about 67 percent of India's total population are younger than 35 the United Nations expects India's population to surpass China's by 2024 India's current population dynamics contribute to what is referred to as a demographic dividend which is the economic growth potential coming from shifts in the working age population the potential of India's workforce is unrivaled throughout the world due to their sheer numbers and current economic landscape another indicator that India's economy is strengthening is the decrease in the poverty rates poverty is still a widespread problem in India with twelve point four percent of the country living below the International poverty level which means they live on less than one dollar 90 cents per day however between 2005 and 2016 a total of 271 million Indians moved out of poverty this means the poverty rate was cut in half in this period of about ten years although India still has a long way to go in addressing poverty this trajectory is a positive sign for the strength of India's future economy another piece of the puzzle for India's potential economic growth is increased urbanization today 50 percent of India's workforce is employed in the agricultural sector but low wages and the decline in land fertility have begun to gradually drive people from rural areas to seek better opportunities in the cities by 2050 it's expected that over eight hundred and thirty million people will live in India's city centres according to the World Bank urbanization Spurs economic growth by increasing demand for both urban businesses and agricultural products which helps to reduce poverty overall however urbanization could have a negative effect if the proper infrastructure is not put in place and if there's not enough jobs available for the growing work force which brings us to the challenges India is facing with their growing economy reasons why India may not become the largest economy despite some promising statistics and economic trajectories India will need to overcome a number of challenges before it will be able to surpass both the US and China to become the world's largest economy the primary challenge is job growth the flipside to India's massive young workforce is the hurdle of providing enough sufficiently paying jobs to sustain the population in 2018 unemployment in India reached a 45 year high as a result of the number of jobs not growing at the same rate as their economy this means that India's newest generation of workers in particular may struggle to find their place to contribute to the ever-growing economy there is also not enough of an effort to re-skill workers whose jobs are becoming obsolete or automated another issue is that 81 percent of India's workforce is engaged in informal work this includes household help street vendors rickshaw drivers and others the economy is not benefiting as much as it could from these types of businesses even though they make up about half of the GDP because they are largely cash based and their informal nature limits their capacity to grow if India takes the steps necessary to formalize their largely informal economy wages would increase more companies would become digitized and a higher amount of taxes would be paid workers would also have more access to business loans and other government resources geared toward registered businesses to put it very simply India must make three significant transitions in order to sustain their current state of economic growth farm to factory rural to urban and informal to formal conclusion economists predict that China will become the largest economy in the world by 2032 and India has the potential to surpass both the US and China by 2050 but economies are dynamic and complex and they're affected by numerous factors like population regulations world events politics and industry trends but if the question is whether this is possible for India the answer is yes will they do everything required to sustain their and make it happen we'll have to wait and see and for an inspirational and informative book on India's potential for the future you should definitely check out the path ahead transformative ideas for India this book brings together informed perspectives from government officials thought leaders and industry executives in India to explore challenges the country is facing for future growth as well as possible solutions to these issues this book is available exclusively on audible for $25 but we've got this covered for you just go to a lakhs comm slash free book and sign up if it's your first time you get the audiobook for free thanks to our partnership with audible question now that we're wrapping up this topic we'd love to know which do you think will happen first China surpasses the u.s. or India surpasses China let us know what you think in the comments and of course for sticking with us until the end here's that bonus you're waiting for India covers only 2.4 percent of the world's land area but holds 17% of the population by 2050 the world's population is expected to be close to 10 billion according to Newsweek the projected population of India in 2050 is over one point seven billion people making it the most populated country by far behind China which is expected to have a population of 1.3 7 billion according to these calculations the US and Nigeria will tie for third with 389 million people thank you for spending some time with us Alexis make sure to subscribe so you never miss another video we also hand-picked these videos for you to watch next as always the conversation continues on social media thanks again and we can't wait to have you back tomorrow

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Id: V_6uxUsKXg0

Length: 10min 40sec (640 seconds)

Published: Tue Sep 03 2019