India Targets Growth to Rival China

India’s economy is showing signs of growth at a time when China, which has been the engine of global growth for decades, is seeing a major economic slowdown. India aspires to be a potential successor. From a restless young population to busy factories, the country has a lot going for it.

However, the gap between the two Asians economies is still massive. India’s economy is currently worth nearly $3.5 trillion, making it the world’s fifth largest. China’s economy, the world’s second largest, is bigger by almost $15 trillion.

India has launched a production-linked incentive program worth $26 billion to attract companies to set up manufacturing in 14 sectors, ranging from electronics and automobiles to pharmaceuticals and medical devices. As a result, some of the world’s biggest firms, including Apple supplier Foxconn, are expanding their operations significantly in India.

The two countries combined are expected to contribute about half of global growth this year, with 35% of that coming from China. India must achieve a sustained growth rate of 8% to surpass China as the biggest contributor to global growth in the next five years. Consensus predictions are that India will expand at 6.3% this year.

China, on the other hand, has set an official growth target of around 5%, as it grapples with mounting challenges, ranging from weak consumer spending to a deepening property crisis.

Much like China did more than three decades ago, India is starting a vast infrastructure transformation by spending billions on building roads, ports, airports, and railways. In this year’s budget alone, $120 billion has been set aside for capital spending.