The goal of this series is to assess the long term trends and not to comment about GDP in an individual year.
The business cycle is a reality of line and growth of the economy fluctuates in the short term over the long-term growth trends.
After the economic liberalisations in the 1990s, India is experiencing accelerated growth for the last few decades. One of the primary drivers of the growth has been driven by the lowering age dependency ratio with an educated workforce, apart from favourable policy changes – both foreign and domestic policies. Within the next decade, the trend in age dependency ratio will see a reversal after the 1960s. This means to maintain and increase economic growth rate, labour force participation and productivity will play more important roles apart from investor-friendly policies.
A higher growth rate does not mean that India is a rich country. India is still a lower-middle Income Economy along with Bangladesh, Nigeria, and Kenya etc. The GNI per capita is at $2020 (current USD with Atlas method) as per the World Bank.
Because the Indian economy went through a major structural change in the 1990s, we are considering the trend from 1990.
The data used is from the DataBank from the World Bank.
GROSS DOMESTIC PRODUCT (GDP)
Indian GDP is at a level of ~$2.73 trillion as of 2018. The GDP (current USD) grew at a CAGR ~7.9% in 1990-2018 period, ~10.3% in 2000-2018 period and ~6.3% in 2010-2018.
In the same time, the global GDP growth was ~4.9% during 1990-2018, ~5.4% during 2000-2018 and ~3.33% during 2010-2018. India outperformed the global growth by ~3% during 1990-2018, ~5% during 2000-2018 and ~3% during 2010-2018.
Although, India consistently underperforming to China which grew ~13.8% during 1990-2018, ~14.4% during 2000-2018 and ~10.6% during 2010-2018.
Although, the growth of GDP is never in a straight line. The effect of the business cycle can be seen in the graph below but the long-term growth rate is settling around 7% - 7.5%.
GDP PER CAPITA
On a purchasing power parity basis, Indian GDP per capita grew at a rate of ~6.8% during 1990-2018, ~7.4 during 2000-2018 and ~7.5% during 2010-2018 to $7,762 as of 2018.
Although this is an outperformance to global GDP per capita growth of ~4.3% during 1990-2018, ~4.6% during 2000-2018 and ~4.3% 2010-2018, we cannot ignore the fact and India GPD per capita (PPP basis) of $7,762 is meagre compared to $61,138 of North America, $18,210 of China and the global average of $17,971 as of 2018.
Again the per capita growth of GDP fluctuated with the business cycle but the long term trend seems to settle around 7.5% - 8.0%.