India's weight in the world economic circuit continues to increase. Over the last twenty years the Indian economy has grown at an average annual rate of about 7,2%, almost quadrupling in size. A seventh of the global growth recorded in the two-year period 2016-17 is attributable to the dynamism of the Indian economy, a contribution equal to less than half of that attributable to China but, at the same time, almost similar to that jointly determined by the United States and the euro area .
The recent economic situation is favorable but it also allows us to glimpse important critical issues, starting with a structural deficit in foreign trade offset, however, by a robust inflow of capital. The dynamics of private investments continues to be modest, partially offset by a growing inflow of direct investments from abroad. The weak demand for non-primary consumption weighs heavily on the country's economic dynamics, reflecting the still very limited presence of a middle class.
In the most recent period, important initiatives have been implemented to remove historic obstacles to a modern development process: from the project (called Aadhaar) aimed at giving every Indian citizen a certain identity to setting up a modern architecture of indirect taxation.
The banking circuit is one of the most fragile aspects of the Indian economic system. The problems mainly concern public credit institutions, which hold 90% of difficult-to-recover credits. To change this scenario definitively, on the one hand the authorities have launched an extensive recapitalization programme, and on the other they are committed to in-depth reform of the sector and to rewriting important chapters of the legislation.
India's weight in the world economic circuit continues to grow. By processing data from the International Monetary Fund, in fact, it can be deduced that about one seventh of the world growth recorded in the two-year period that has just ended is attributable to the dynamism of the Indian economy. The contribution of this country is less than half of that attributable to China but, at the same time, is almost similar to that jointly determined by the United States and the euro area.
What has just been highlighted is the consequence of a development process that has been underway for twenty years. Between 1999 and 2008 India doubled its economic size (average annual growth rate of 6,9%). The reduced involvement in the international crisis of 2008-09 made it possible to improve this already considerable result in the following decade. Overall, the Indian economy has grown over the last twenty years at an average annual rate close to 7,2%, almost quadrupling its overall size. While decidedly appreciable, this development dynamic is still far from that achieved by China in the same period of time (9%). However, if we consider only the last five years, the difference in growth speed is effectively nullified (7,1% for both).
Although the favorable economic situation and the intense process of modernization underway are relevant arguments, India's possible catching up (not to say "overtaking") of China is not yet conceivable, not even in the distant future.
