New Delhi

A recent analysis published by Barclays Plc has revealed that India needs to achieve an annual economic growth rate of 8 per cent to outpace China and become the leading contributor to the global economy,

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The study emphasises the necessity for substantial investment, particularly in traditional sectors such as mining, utilities, transportation, and storage, which are believed to have significant ripple effects on the broader economy.  

According to The Economic Times, Barclays' senior economist in Mumbai, Rahul Bajoria, notes that these sectors have been overlooked in favour of newer industries like telecommunications and digital technology in recent years. Consequently, there is a pressing need for increased investments in these traditional areas, particularly from the government, to address capacity constraints. 

"Higher investment, especially in traditional sectors, should also have a positive impact on employment and household income, which is likely to be a key deliverable of the economic growth story pursued by policymakers," The Economic Times quotes Bajoria as saying while emphasising on the broader benefits of higher investment. 

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This suggests that not only would such investment stimulate economic growth, but it would also have a direct impact on improving the livelihoods of the Indian population. 

Furthermore, the analysis from Barclays underscores that India had experienced an average economic growth rate of around 8 per cent from 2005 to 2010, a pace that could potentially be regained after the upcoming general elections, provided the new government aims for such a growth rate while maintaining macroeconomic stability.  

With an ambitious goal of 8 per cent growth, India could be in a position to become a prominent contributor to global economic growth and reduce the gap with China. 

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According to Barclays, China's contribution to the global gross domestic product is estimated at approximately 26 per cent in the five-year period leading up to 2028, while India's contribution stands at an estimated 16 per cent , assuming a GDP growth rate of 6.1 per cent over the same period. Achieving 8 per cent growth could bring India's contribution much closer to China's. 

In alignment with the analysis from Barclays, the International Monetary Fund (IMF) recently released a report on India's economic outlook, raising its growth forecast for the fiscal year 2024 from 6.1 per cent to 6.3 per cent. Reports suggest this upward revision reflects a "stronger-than-expected consumption during April-June," indicating positive signs for India's economic performance. 

However, while the Indian government has been increasing infrastructure spending in recent years, reports indicate that allocating a record 10 trillion rupees in the current fiscal year through March 2024, it is unlikely to maintain such a robust pace of investment in capital projects.

This shift towards private sector involvement in investment has been echoed by Goldman Sachs Group Inc. This implies that India's journey to 8 per cent annual growth will require both public and private sector collaboration and strategic investments in crucial sectors.  

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