The truth may finally be wearing off the old saying that India only ever compares itself with itself. As the Indian economy has proved to be one of the least dim spots in a gloomy emerging market landscape, boasts are multiplying that it is overtaking China as the engine of world expansion. Jayant Sinha, India’s junior finance minister, recently laid down the bold prediction that “in coming days, India will leave China behind as far as growth and development matter”.
Not, as it were, so fast. While India’s short-term macroeconomic performance has put it at a better place in the cycle than most big emerging markets, the longer-term structural problems that have kept it in a lower growth class than China unfortunately persist, as do the political elephant traps awaiting intrepid reformers.
On the face of it, the Indian economy is performing well, and the popularity of Narendra Modi, the prime minister elected on the promise of liberalising reform last year, is holding up. Christine Lagarde, IMF managing director, has referred to India as a “bright spot” in the slowing global economy. Growth equalled China’s last year at 7.3 per cent, and the IMF predicts India will be the fastest-growing large economy in the world this year.