InvestorQ : What does the China GDP announcement really mean for Indian policy makers?
diksha shah made post

What does the China GDP announcement really mean for Indian policy makers?

sarah Leo answered.
2 years ago

A number of Indian newspapers focused on China growing at its slowest rate in 44 years. But that is missing the point. The fact is that 2.3% growth comes after negative growth in the Mar-20 quarter. Also, it is growing at a time when the entire world economy is expected to contract by around 3-4% and could have been worse, but for China.

Remember, China was the fountainhead of the pandemic and took a fair share of the blame and a hit in the Mar-20 quarter. However, China managed to revive the growth in the next three quarters and end the year with positive growth, largely on the strength of exports. Therein perhaps lies an important lesson for India in terms of policy.

In the Indian context, if you consider optimistic estimates, the full year GDP contraction of Indian economy is likely to be closer to -7.7%. It could improve but it is likely to be marginal. CY2020 data could be worse. Indian economy has surely recouped to pre-COVID levels of economic activity but the real challenge will begin now to bring growth back.

Growth can only come back with a clear export focus. Consumer income and demand in India will take time to grow as it depends on consumer confidence. The time is ripe to push export share. The focus must be to do a repeat of what India achieved with pharma in 1990s and IT post-2000. Otherwise, India risks a widening growth gap with China once again!