India’s Overtaking: Key Factors Beyond Initial Indicators

India is poised to surpass Japan as the world’s fourth-largest economy by the end of this fiscal year, according to the International Monetary Fund (IMF). However, Claude Smadja, former Managing Director of the World Economic Forum, warns that this milestone should not lead to complacency. He emphasizes the stark contrast in per capita GDP between the two nations, highlighting the need for India to focus on improving its industrial sector and overall economic reforms to truly elevate living standards across all demographics.

Economic Growth and Per Capita Disparity

India’s GDP is projected to reach approximately $4,187 billion, edging out Japan’s $4,186 billion by the end of the fiscal year 2026. Despite this impressive growth, Smadja points out that India’s per capita GDP stands at just $2,878.4, which is a mere 8.5% of Japan’s per capita income of $33,955.7. This disparity indicates that the average Japanese citizen earns nearly 11.8 times more than their Indian counterpart. Smadja stresses that while the size of the economy is an important indicator of global standing, it is the per capita GDP that truly reflects the economic well-being of a nation’s citizens. He cautions that achieving a higher ranking in global economic terms should not distract from the pressing need for reforms that benefit all layers of society, particularly those beyond the expanding middle class.

Manufacturing and Industrial Sector Challenges

To achieve its ambitious goal of becoming a $7-trillion economy by 2030, India must significantly bolster its industrial sector. Smadja notes that manufacturing currently contributes to only half of India’s GDP compared to China’s, which he considers inadequate given India’s vast population and economic potential. He argues that without a substantial increase in manufacturing activities, India’s aspirations for economic growth may remain unfulfilled. The need for a robust industrial base is critical not only for economic expansion but also for creating jobs and improving living standards across the country.

Leveraging Big Data for Technological Advancement

Smadja highlights India’s unique position in the global technology landscape, particularly in big data management. He believes that India’s extensive internet connectivity and mobile phone usage, combined with the national “Aadhaar” identification system, have resulted in significant data generation. This data is crucial for driving technological innovation and establishing India as a leader in the global big data arena. Smadja emphasizes the importance of safeguarding this strategic resource to foster advancements in disruptive technologies and enhance India’s standing in the technology sector.

The Importance of Skill Development

India’s youthful demographic presents a significant advantage, but Smadja underscores the urgent need for enhanced skill development and retraining across the workforce. As the economy evolves, it is essential for workers to acquire new skills that align with the demands of a changing job market. This focus on education and training will not only help in addressing the skills gap but also ensure that the benefits of economic growth are widely shared among all segments of society. By investing in human capital, India can better position itself to meet its economic goals and improve the quality of life for its citizens.

Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.

Follow Us on Twitter, Instagram, Facebook, & LinkedIn