India overtakes China as world’s fastest-growing economy

After long playing second fiddle to China, India has leapfrogged its rival to become the world’s fastest-growing major economy.

Official figures released yesterday show that its GDP growth accelerated to 7.2% in the last three months of 2017, pointing to a “clear strengthening of India’s recovery from a sharp slump in the first half of 2017”, when growth fell from 7% to a three-year low of 5.7%, says CNNMoney.

The drop followed two disruptive policy changes by Indian Prime Minister Narendra Modi. In November 2016, he suddenly banned the country’s two largest bank notes in a bid crackdown on corruption and forgery and boost tax revenue. Then, in June last year, he pushed through an overhaul of the tax system.

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Both measures failed to have the desired impact, hitting India’s predominantly cash economy hard and disrupting business, which struggled to adapt to the new tax regime.

Now the economy seems to be back on track, and is expected to extend the gap with China in the coming year. The International Monetary Fund is predicting it will grow by 7.4% over the next ten months.

But the administration is not resting on its laurels and “has set its sights even higher”, says CNN.

In an interview with the news network earlier this week, Amitabh Kant, one of the Indian government’s top policy advisers, said growth of 10% or more should be “very doable”.