Does India become richer or in difficulty in its growth history? The founder of Wisdom Hatch, Akshat Shrivastava, in an article on X, unpacked the mixed signals of the economy of India.
On the one hand, India is about to become the world’s fourth worldwide economy, exceeding Japan this year.
On the other hand, nearly 800 million citizens depend on free rations, household savings are at historic stockings and the rupee has depreciated at its lowest levels.
India GDP growth, a key indicator of economic health, shows disturbing trends, he writes.
“Since 2019, our real average GDP growth rate has oscillated about 6%, which is worrying for an increasing economy of the India scale,” said Shrivastava. In comparison, China has increased at two -digit rates during its advanced growth phase.
Private expenses, which represent 60% of India GDP, slows down. Over the past five years, its growth has only reached 4.8%on average. “High taxes and the drop in household economies are key contributors to this slowdown,” he notes. India’s savings / GDP ratio is now a 50 -year hollow, leaving less disposable income to fuel economic growth.
Foreign investors also send mixed signals. While foreign direct investment inputs (IDE) increased by 26% in the first half of financial year 24-25, the IED net – a more precise indicator after taking out of outings – fell to a hollow of 12 years old. “This indicates that foreign investors do not bet on the long -term perspectives of India,” warns Shrivastava.
The weakening of the roupire should, in theory, attract the IED, because investors can buy more with their foreign currency. However, even with the INR going from 54 to 86 against the dollar in the last decade, the participation of the IED and foreign institutional investors (FII) has decreased. Shrivastava stresses: “Internal consumption alone cannot generate massive growth. Real growth requires foreign investments or exporting goods and services. »»
To reverse these trends, Shrivastava suggests tax reductions and better tax policies. “Tax rationalization is necessary to widen the base beyond the current level of 2%. This would propel markets, increase consumption and encourage growth. »»
His advice to investors? Diversify on a global scale, investing in high-growth sectors such as AI and semiconductors and preparing for a high inflation environment. “Your wealth is in your hands.”
