- India has overtaken the United Kingdom to become the fifth largest economy in the world.
- However, India's per capita income is still far behind other emerging economies.
- China's economy has consistently outpaced India's, leading to a significant gap between the two countries.
- India's young population is both a strength and a weakness, with high rates of unemployment and low labor force participation.
- The lack of employment opportunities for women is a major issue, as increasing female participation could significantly boost India's workforce and economy.
- India's poor education and healthcare systems are hindering its development and productivity.
- Infrastructure and public services in India are inadequate and limit growth.
- India needs to attract more foreign direct investment to spur its economy.
- The government's fiscal deficit has grown, putting pressure on finances and raising concerns about sustainability.
- India's debt-to-GDP ratio is relatively high, but it still maintains a stable credit rating.
- India's current account deficit is widening due to a persistent trade deficit and reduced foreign investments.
- Consumer confidence is rising, but capital spending and manufacturing are crucial for sustained economic growth.
- India has the opportunity to catch up in manufacturing as global manufacturers look to reduce their reliance on China.

- The populist government of Prime Minister Narendra Modi aims for broader prosperity in India
- Investment in infrastructure and regulatory reforms have attracted foreign investors
- Investing in human capital can address challenges such as skilled workforce and job creation
- Education and training are crucial for long-term growth and competitiveness
- The government needs to allocate more resources and prioritize education in its budget and policymaking
- Reforms in education and investment in human capital are crucial for India's global economic leadership and citizens' future.

India has emerged as one of the world's fastest-growing economies in recent years, but it still faces a number of challenges that are holding it back from achieving its full potential. In this video, we take a deep dive into the current problems facing the Indian economy.

One major issue is the comparison with other Asian economies such as China, Japan, and South Korea. While India has seen solid economic growth, it has not been able to match the pace of its Asian counterparts. We'll explore some of the reasons for this and what India can learn from other successful Asian economies.

We'll explore the challenges that India faces in terms of education, infrastructure, foreign direct investment, and international trade, and how these challenges have contributed to slower economic growth than some of its neighbors. We'll also discuss how India is working to address these issues and improve its economy in the long run. Overall, this video provides a comprehensive overview of the major problems facing the Indian economy today.

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India is now the fifth largest economy, overtaking the United Kingdom.

When we talk about the Indian economy, we become extremely optimistic, quoting India as the next economic superpower.

But when we compare the per capita income of the top 5 emerging economies, India is a long way from becoming an economic superpower.

However, India has shown impressive growth, but it lags behind its rival China.

The history of Asia can be read by comparing the Indian and Chinese economies.

According to World Bank figures in chain dollars, in 1980, India's gross domestic product was 64% of China's.

By 2001, when China joined the World Trade Organization, India's economy was only 28% as large as China's.

And despite several years of rapid growth in the 21st century, by 2021, India's economy had fallen even further behind, and equalled only 17% of the Chinese economy.

That's because China's GDP growth is always higher than India's in the past.

If India's economy had kept pace with China over the past 40 years, India would currently have a GDP of $10 trillion instead of $3.47 trillion.

There's 1 thing India would beat China at, population.

But according to some projections, its workforce will not exceed China's until mid-century, even though Indians are much younger.

India has more than 50% of its population below the age of 25 and more than 65% below the age of 35.

It is the country's strength as well as its weakness.

According to the Center for Monitoring Indian Economy, a private research firm that publishes more recent data than official numbers, the jobless rate has been hovering around 7% or 8%, up from around 5% over the last 5 years.

And according to the CMIE, the labor force participation rate, which includes persons who are employed or seeking employment, has fallen below 40% from 46% 6 years ago.

This chart shows India's youth unemployment is 40%, much higher than the overall rate of 7.7%.

If you include household adult women, the rate would be significantly higher.

A rise in female employment rates to the male level would provide India with an extra 235 million workers.

This is more than the EU has of either gender and more than enough to fill all the factories in the rest of Asia.

If India rebalanced its workforce in this manner, The IMF believes that the world's largest democracy would be 27% richer.

It is not unusual in developing economies for a family's social standing to be enhanced by having its women remain at home.

But India stands out, as its female labor force participation rate is well below those of countries at comparable income level.

For example, in neighboring Bangladesh, whose customs are not so different from India's, a boom in garment manufacturing has increased the number of working women by 50% since 2005.

In Vietnam, three-quarters of women work.

But the mega factories that boosted female employment there are largely absent in India.

The problem is the lack of employment opportunities.

The so-called India's world-beating growth isn't creating jobs.

A big part of the problem is India's poor education system and job training, which means local degrees and certificates are often considered worthless by employers.

This data shows only 20% of the population in the age group of 25 to 34 is in high-skill profession, such as medicine, advanced research with more vocational programs leading to the labor market.

India's youth failed to get skills and education because of its government.

The Indian government only spends an average of 2% of its GDP on primary to post-secondary education, which is very low compared to Brazil and South Africa.

India is also among the countries with the lowest public expenditure on health care, at only 1.3% of GDP.

India is failing to provide 2 key components of human development, education and health.

As a result, labor productivity is declining.

Labor productivity is most important factor for improving the living standards of people in the economy.

As an economy's labor productivity grows, it produces more goods and services for the same amount of relative work.

This increase in output makes it possible to consume more goods and services for an increasingly reasonable price.

If we compare the GDP per hour worked of BRICS countries, India has the lowest level of productivity.

China's productivity took off in 2000 because when its technocrats decide to dam a river, build a road or move a village, the dam goes up, the road goes down, and the village disappears.

The displaced villagers may be compensated, but they are not allowed to stand in the way of progress.

China's leaders make rational decisions that balance the needs of all citizens over the long term.

This has led to rapid, sustained growth that has lifted hundreds of millions of people out of poverty.

Infrastructure, such as roads and power, and public services, such as education and drinking water are woefully inadequate and limit growth.

India's top computer scientists are entertained around the world, Yet most children in rural areas lack the basic education needed to find more productive work.

A popular argument is that other Asian economies grew by 8-9% for long periods.

But this East Asian economy invested much more in education and infrastructure than India does today.

Regarding infrastructure, the Indian economy has seen unstoppable growth in fixed capital formation, including land improvements, plant, machinery, and equipment purchases, and the construction of roads, railways, and commercial and industrial buildings.

Still, since 2007, it has fallen from 36% to 29%.

Several factors that have led to the decrease in fixed capital formation include policy uncertainty, financing problems, weakness in private investment, and a slowdown in the banking sector.

But the most important factor is the fall in foreign direct investment.

Since 2008, FDI has fallen from 3.6% to 1.4% of GDP.

The government needs to increase the amount of FDI to as much as 6% of the gross domestic product to help spur the economy.

It's important for the government to implement policies and initiatives to attract foreign investors, such as making it easier to do business, providing tax incentives, and streamlining the investment process.

Narendra Modi could not double the size of the economy to $5 trillion by 2025 while promoting self-reliance and keeping government revenue under pressure.

In the last 10 years, the government's fiscal deficit, which is the difference between the government's total expenditure and total revenue, has grown.

This has led to pressure on the government's finances and raised concerns about the sustainability of its spending program.

The increasing fiscal deficit also impacts the country's credit rating and borrowing costs.

If the deficit continues to grow, it could lead to higher inflation and interest rates, which could further slow economic growth.

Moreover, It could also increase the government's dependence on borrowing, potentially leading to a higher debt-to-GDP ratio.

This indicates that the country has a relatively high level of government debt compared to its economic output.

However, India's debt-to-GDP ratio is not as high as that of some other countries.

Credit rating agencies like Moody's, Standard and Poor's, and Fitch Ratings gave India a stable rating, which is considered investment-grade rating.

This indicates that the agencies believe that India has a relatively low credit risk and a stable outlook for its economy.

Another crucial area to push forward is exports.

According to this report, India's current account balance widened to the highest in nearly a decade as the nation's trade gap ballooned and foreign investments fell.

The current account, the broadest measure of the country's overseas trade and service flow, was in a deficit of $36 billion, or 4.4% of GDP.

India's current account deficit has been a matter of concern in recent years.

The country faces a persistent trade deficit and increased payments for imports, leading to a widening gap between inflows and outflows.

According to the Financial Stability Report, The widened trade deficit reflected the impact of slowing global demand on exports.

Although global demand has slowed, Indian consumer demand is rising.

This Consumer Confidence Index shows the level of optimism or pessimism among households about the overall state of the economy and their personal financial situation.

It is typically calculated based on surveys of a representative sample of households, in which they are asked about their views on current and future economic conditions, employment prospects, and their spending and saving patterns.

The index is used as an indicator of consumer spending, which is an important driver of economic growth.

Consumption may rise further as inflation falls and Indians purchasing power rises, but capital spending and manufacturing are what really matter.

They boost current growth and the economy's potential.

Manufacturing for the world market has not been India's strong suit.

Rickety infrastructure, expensive and unreliable electric power, complicated labor and land laws, and a Frustrating bureaucracy prevented India from joining previous waves of Asian industrialization.

Japan, South Korea, Taiwan, Singapore, Vietnam, and of course China all outperformed India in the race to industrialize.

Today, however, a confluence of international and domestic factors is giving India a chance to catch up.

Internationally, manufacturers are looking to reduce their dependency on China.

Domestically, the populist government of Prime Minister Narendra Modi wants broader prosperity than the cyber economy on its own can provide.

Years of investment in highways, railroads, and ports combined with regulatory reforms have reduced, if not eliminated, the obstacles that long kept foreign investors at bay.

Investing in human capital can also help address several other challenges facing India, such as the need for a more skilled and productive workforce and the challenge of creating decent jobs for the growing population.

Education and training are critical to the long-term growth and competitiveness of the Indian economy.

A well-educated and skilled workforce is essential for attracting investment, promoting innovation, and increasing productivity.

To achieve these goals, the government must allocate more educational resources and prioritize them in its budget and policymaking.

Overall, reforming the education system and increasing investment in human capital is crucial for India to become a leading global economy and ensure a better future for its citizens.


Speaker 0: India is now the fifth largest economy, overtaking the United Kingdom. When we talk about the Indian economy, we become extremely optimistic, quoting India as the next economic superpower. But when we compare the per capita income of the top 5 emerging economies, India is a long way from becoming an economic superpower. However, India has shown impressive growth, but it lags behind its rival China. The history of Asia can be read by comparing the Indian and Chinese economies.

According to World Bank figures in chain dollars, in 1980, India's gross domestic product was 64% of China's. By 2001, when China joined the World Trade Organization, India's economy was only 28% as large as China's. And despite several years of rapid growth in the 21st century, by 2021, India's economy had fallen even further behind, and equalled only 17% of the Chinese economy. That's because China's GDP growth is always higher than India's in the past. If India's economy had kept pace with China over the past 40 years, India would currently have a GDP of $10 trillion instead of $3.47 trillion.

But this is not the case. There's 1 thing India would beat China at, population. But according to some projections, its workforce will not exceed China's until mid-century, even though Indians are much younger. India has more than 50% of its population below the age of 25 and more than 65% below the age of 35. It is the country's strength as well as its weakness.

According to the Center for Monitoring Indian Economy, a private research firm that publishes more recent data than official numbers, the jobless rate has been hovering around 7% or 8%, up from around 5% over the last 5 years. And according to the CMIE, the labor force participation rate, which includes persons who are employed or seeking employment, has fallen below 40% from 46% 6 years ago. This chart shows India's youth unemployment is 40%, much higher than the overall rate of 7.7%. If you include household adult women, the rate would be significantly higher. A rise in female employment rates to the male level would provide India with an extra 235 million workers.

This is more than the EU has of either gender and more than enough to fill all the factories in the rest of Asia. Think about the repercussions. If India rebalanced its workforce in this manner, The IMF believes that the world's largest democracy would be 27% richer. It is not unusual in developing economies for a family's social standing to be enhanced by having its women remain at home. But India stands out, as its female labor force participation rate is well below those of countries at comparable income level.

For example, in neighboring Bangladesh, whose customs are not so different from India's, a boom in garment manufacturing has increased the number of working women by 50% since 2005. In Vietnam, three-quarters of women work. But the mega factories that boosted female employment there are largely absent in India. The problem is the lack of employment opportunities. The so-called India's world-beating growth isn't creating jobs.

A big part of the problem is India's poor education system and job training, which means local degrees and certificates are often considered worthless by employers. This data shows only 20% of the population in the age group of 25 to 34 is in high-skill profession, such as medicine, advanced research with more vocational programs leading to the labor market. India's youth failed to get skills and education because of its government. The Indian government only spends an average of 2% of its GDP on primary to post-secondary education, which is very low compared to Brazil and South Africa. India is also among the countries with the lowest public expenditure on health care, at only 1.3% of GDP.

India is failing to provide 2 key components of human development, education and health. As a result, labor productivity is declining. Labor productivity is most important factor for improving the living standards of people in the economy. As an economy's labor productivity grows, it produces more goods and services for the same amount of relative work. This increase in output makes it possible to consume more goods and services for an increasingly reasonable price.

If we compare the GDP per hour worked of BRICS countries, India has the lowest level of productivity. China's productivity took off in 2000 because when its technocrats decide to dam a river, build a road or move a village, the dam goes up, the road goes down, and the village disappears. The displaced villagers may be compensated, but they are not allowed to stand in the way of progress. China's leaders make rational decisions that balance the needs of all citizens over the long term. This has led to rapid, sustained growth that has lifted hundreds of millions of people out of poverty.

But this is not the case with India. Infrastructure, such as roads and power, and public services, such as education and drinking water are woefully inadequate and limit growth. India's top computer scientists are entertained around the world, Yet most children in rural areas lack the basic education needed to find more productive work. A popular argument is that other Asian economies grew by 8-9% for long periods. So why not India?

But this East Asian economy invested much more in education and infrastructure than India does today. Regarding infrastructure, the Indian economy has seen unstoppable growth in fixed capital formation, including land improvements, plant, machinery, and equipment purchases, and the construction of roads, railways, and commercial and industrial buildings. Still, since 2007, it has fallen from 36% to 29%. Several factors that have led to the decrease in fixed capital formation include policy uncertainty, financing problems, weakness in private investment, and a slowdown in the banking sector. But the most important factor is the fall in foreign direct investment.

Since 2008, FDI has fallen from 3.6% to 1.4% of GDP. The government needs to increase the amount of FDI to as much as 6% of the gross domestic product to help spur the economy. It's important for the government to implement policies and initiatives to attract foreign investors, such as making it easier to do business, providing tax incentives, and streamlining the investment process. Mr. Narendra Modi could not double the size of the economy to $5 trillion by 2025 while promoting self-reliance and keeping government revenue under pressure.

In the last 10 years, the government's fiscal deficit, which is the difference between the government's total expenditure and total revenue, has grown. This has led to pressure on the government's finances and raised concerns about the sustainability of its spending program. The increasing fiscal deficit also impacts the country's credit rating and borrowing costs. If the deficit continues to grow, it could lead to higher inflation and interest rates, which could further slow economic growth. Moreover, It could also increase the government's dependence on borrowing, potentially leading to a higher debt-to-GDP ratio.

India's debt-to-GDP ratio is around 90%. This indicates that the country has a relatively high level of government debt compared to its economic output. However, India's debt-to-GDP ratio is not as high as that of some other countries. Credit rating agencies like Moody's, Standard and Poor's, and Fitch Ratings gave India a stable rating, which is considered investment-grade rating. This indicates that the agencies believe that India has a relatively low credit risk and a stable outlook for its economy.

Another crucial area to push forward is exports. According to this report, India's current account balance widened to the highest in nearly a decade as the nation's trade gap ballooned and foreign investments fell. The current account, the broadest measure of the country's overseas trade and service flow, was in a deficit of $36 billion, or 4.4% of GDP. India's current account deficit has been a matter of concern in recent years. The country faces a persistent trade deficit and increased payments for imports, leading to a widening gap between inflows and outflows.

According to the Financial Stability Report, The widened trade deficit reflected the impact of slowing global demand on exports. Although global demand has slowed, Indian consumer demand is rising. This Consumer Confidence Index shows the level of optimism or pessimism among households about the overall state of the economy and their personal financial situation. It is typically calculated based on surveys of a representative sample of households, in which they are asked about their views on current and future economic conditions, employment prospects, and their spending and saving patterns. The index is used as an indicator of consumer spending, which is an important driver of economic growth.

Consumption may rise further as inflation falls and Indians purchasing power rises, but capital spending and manufacturing are what really matter. They boost current growth and the economy's potential. Manufacturing for the world market has not been India's strong suit. Rickety infrastructure, expensive and unreliable electric power, complicated labor and land laws, and a Frustrating bureaucracy prevented India from joining previous waves of Asian industrialization. Japan, South Korea, Taiwan, Singapore, Vietnam, and of course China all outperformed India in the race to industrialize.

Today, however, a confluence of international and domestic factors is giving India a chance to catch up. Internationally, manufacturers are looking to reduce their dependency on China. Domestically, the populist government of Prime Minister Narendra Modi wants broader prosperity than the cyber economy on its own can provide. Years of investment in highways, railroads, and ports combined with regulatory reforms have reduced, if not eliminated, the obstacles that long kept foreign investors at bay. Investing in human capital can also help address several other challenges facing India, such as the need for a more skilled and productive workforce and the challenge of creating decent jobs for the growing population.

Education and training are critical to the long-term growth and competitiveness of the Indian economy. A well-educated and skilled workforce is essential for attracting investment, promoting innovation, and increasing productivity. To achieve these goals, the government must allocate more educational resources and prioritize them in its budget and policymaking. Overall, reforming the education system and increasing investment in human capital is crucial for India to become a leading global economy and ensure a better future for its citizens. You

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