Indian Economy Continues to Make Progress

December 1, 2015Indiaby EW News Desk Team

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According to official data, the Indian economy grew 7.4 percent year-on-year in the previous quarter, surging past China, according to AFP. This marks the third quarter in which India posted growth above 7 percent, outperforming China within each quarter. The good news raises the possibility that the central bank will keep interest rates unchanged. India showed expansion in such sectors as trade, manufacturing, finance and transportation.

Various analysts pegged India as the fastest-growing economy, and all data indicates that the South Asian country remains on the correct course. With Chinese growth slowing down, India paves the way as the primary emerging market within the world economy, but the problem boils down to whether or not Prime Minister Narendra Modi can keep the momentum going.

For instance, his administration aims to impose a long-awaited national sales tax, but such a move would require approval from an adversarial parliament. Getting more reforms through parliament will constitute a tricky feat, making investors nervous in the process. Many in the investment community wish to see further economic reforms—especially measures that create more jobs for the nation's rising young population.

Indian youth comprise 20 percent of the total population as of 2011. However, youth joblessness is not specific to India, as many nations around the world hold high youth unemployment numbers due to a stagnant world economy, particularly within Emerging Markets.

Youth Joblessness

Investors have a special interest in India because of its high youth population, but it could lead to societal and political instability if the status quo continues. Moreover, unemployment among young people only leads to a stifling of economic prosperity down the road, as more people lack opportunities for advancement, preventing them from fully participating in the economy.

With that, many young Indians see it as an opportunity to advance themselves through self-employment and entrepreneurship, and these young minds could find innovative solutions that will reform the economy.

Lack of Middle Class Growth

India assumes responsibility for lifting many people out of poverty, but the nation's poor remain an important issue. While India's thriving middle class serves as a sign of significant progress, it remains small in comparison to other emerging markets such as China, and the middle-income crowd cannot fuel mass consumerism and luxury sales in the short-term.

India has a middle class population of 3 percent, compared to 11 percent for China, and only 6.6 million Indians joined the middle class from 2008 to 2015. India has made vast gains in a short period, but manufacturing and industry jobs remain crucial in extending more opportunities to people.

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