As per Moody’s, the Indian economy has recently crossed $3.5 t | StudY LoveR VeeR (SLV) Official✅

As per Moody’s, the Indian economy has recently crossed $3.5 trillion in size. The IMF expects it to exceed $3.7 trillion this year.
Currently, Indian economy's size is about that of China in 2007. But without a spur to manufacturing, it will be extremely difficult for India to follow China's growth trajectory.

A Comparison of Chinese and Indian Economy

A decade and a half ago, China had a per capita income of $2,694, while the IMF expects India’s per capita income to rise from $2,379 in 2022 to $2,601 in 2023.
According to World Bank, India’s gross domestic product was 64% of China’s in 1980.
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.

Points of Divergence between Indian and Chinese Economy:

Different Drivers of Growth

Investments and Exports
China’s meteoric rise has been driven by investments and exports.
Between 2003 and 2011, the country’s investment to GDP ratio (gross fixed capital formation) averaged 40 per cent.
In comparison, even during this high growth phase, the investment ratio in India averaged only around 33 per cent. Worryingly, the gap between the two countries has widened since.
In the years from 2012 to 2021, as the Chinese economy pulled further away, its investment ratio climbed even higher, averaging almost 43 per cent. In India, it fell to around 29 per cent as the investment momentum tapered off.
In 2022-23, India’s exports of goods and services surpassed $770 billion, while imports were around $890 billion.
In 2007, when the Chinese economy was of comparable size, the country’s exports had crossed $1.2 trillion, driven by exports of goods not services, while imports stood at $950 billion, signalling its deeper integration with the global economy.
Between 2007 and 2021, China’s exports averaged about 24 per cent of GDP. While India’s exports have averaged roughly 21 per cent over this period, they were almost stagnant at around 19 per cent between 2015 and 2020.
Tariff Rates
China’s emergence as the epicentre of global supply chains over the decades has been facilitated in part by the lowering of tariffs.
The country’s tariff rate (simple mean) fell from 10.69 per cent in 2003 to 8.93 per cent in 2007, declining further to 5.32 per cent in 2020.
In comparison, while India’s tariff rate fell from 25.63 per cent in 2003 to 8.88 per cent in 2017, it has risen thereafter.
High Participation of Female Labour Force
China also had and continues to have a considerably higher labour force participation rate.
In 2007, its labour force participation stood at almost 73 per cent (ages 15 and above).It has since declined to 67 per cent.
In India, the participation rate is estimated at around 50 per cent in 2022.
As the male labour force participation rate in both countries is roughly the same, the difference is largely due to female participation.
In China, the female labour force participation rate stood at 66 per cent in 2007. By 2022, it had declined to 61 per cent.
In India, it was considerably lower at 30 per cent in 2007, and has since fallen even further to 24 per cent in 2022.