India is on the brink of achieving a noteworthy milestone, with projections indicating its Gross Domestic Product (GDP) could reach up to 4 trillion USD by 2024-25. This growth trajectory places it on the cusp of overtaking Japan’s economy, which currently stands at 4.1 trillion USD, a figure closely shadowed by India due to the rapid weakening of the Japanese Yen (JPY). With Germany’s economy growing at a slower pace, with a GDP of 4.6 trillion USD, forecasts suggest that by 2026-27, India might surpass Germany to become the world’s fourth-largest economy in dollar terms. This prediction hinges on the global economy remaining free from any unforeseen shocks that could derail this progress.
However, despite ascending to the position of the world’s third-largest economy, India’s per capita income will still portray a picture of relative poverty. Even so, the sheer magnitude of its economy presents opportunities that can be harnessed for future growth. India’s journey to this point is notable, given its historical backdrop as a preeminent economic power.
Historically, India has held a significant portion of the global economy. Estimates by Angus Maddison indicate that around 1 AD, India accounted for about 33 percent of the world economy, a testament to its economic might. This era saw Indian traders extend their operations from the Middle East to East Asia, challenging Roman policymakers with a trade deficit. Even a millennium later, India’s economic footprint remained the largest globally, contributing 29 percent to the world economy.
The global economic landscape during these periods featured intricate supply chains that stretched from the Fatimid Empire through the Chola Empire to the Song Dynasty, with Indian merchant guilds establishing an expansive trading network. The economic vitality of this period illustrated the interconnectedness of global economies long before the modern era of globalization.
However, the 13th and 14th centuries witnessed turmoil due to Turkic-Mongol invasions and the plague, severely impacting major economic centers. Despite these challenges, by the 16th century, India, under the Vijayanagara Empire, retained its position as a significant economic force, even though its share had slightly diminished in the face of emerging powers and changing trade dynamics.
The influence of European colonization and the advent of the Industrial Revolution marked a period of considerable change, with Western Europe’s share of the global economy increasing significantly. By contrast, the 19th century saw a dramatic decline in both China and India’s shares, exacerbated in India’s case by British colonial exploitation and conflicts with regional powers.
The 20th century introduced seismic shifts with the rise of the United States and the impact of two World Wars on former colonial powers. Post-independence, India’s position in the global economy declined further until economic liberalization in the 1990s initiated a turnaround.
Now, as we approach 2024, India’s economic growth story represents not just a recovery but a reassertion of its historical significance as a global economic powerhouse. The International Monetary Fund (IMF) forecasts that by 2030, India’s share of the global economy could reach 9.2 percent in Purchasing Power Parity (PPP) terms, marking a significant resurgence.
This economic resurgence is significant, considering the long cycle of decline and recovery that India has experienced. As the nation continues on this upward trajectory, it represents a new chapter in its storied economic history, one that acknowledges its past achievements while looking forward to future possibilities. India’s journey from a once-dominant economy through periods of decline to its current rise offers a rich narrative of endurance, adaptation, and growth, underscoring the dynamic nature of global economic leadership.
