ANN/THE STAR – India has been the world’s fastest-growing major economy in the last two years. It is forecast to retain the top spot in 2024 as the urbanisation and industrialisation process reaches the rapid take-off phase.
The International Monetary Fund (IMF) stated that real gross domestic product (GDP) is forecast to increase more than six per cent in both 2023 and 2024. Compound annual growth will be slightly faster than China (four per cent to five per cent), twice as fast as the world economy as a whole (three per cent), and four times faster than in the advanced economies (1.5 per cent).
India’s economy and demographics resemble China’s between the late 1990s and early 2000s, indicating there could be two more decades of rapid sustained growth ahead as well as an enormous associated rise in energy use.
For example, real GDP per capita at purchasing power parity in India had risen to USD7,100 in 2022, a rate China first reached in 2007-2008.
India’s median population age has increased but is still low at 27.9 years, which China reached in 1998. Population growth, meanwhile, averaged 1.1 per cent per year over the 10 years from 2012 to 2022, similar to China’s over the 10 years from 1988 to 1998.
As for the share of the population living in urban areas is estimated to have reached 35 per cent in 2022, a level reached in China around 2000.
Energy consumption in India reached 26 gigajoules per person in 2022, a rate China reached in the early 1990s. Its total oil consumption climbed to 237 million tonnes in 2022, which China first reached in 2001.
There are important differences between the two economies, including climate (China’s cities are at much higher latitudes so more energy is needed for heating) and relations between state-owned firms and the private sector. But there are also important similarities, including a large rural population ready to migrate to urban areas in pursuit of better paid work and a large potential to industrialise by catching up with more advanced economies.
India is entering the central take-off portion of the S-curve when urbanisation, industrialisation, household incomes and energy consumption increase most rapidly, usually for several decades at a time.
