The booming economy of India is expected to grow at a robust average rate of 7.7% GDP through 2019 and is predicted to outpace the economy of China. The latter is in line for a projected growth of rate 6.6% — still pretty good by U.S. standards. The United States is still hoping to achieve 3% growth rate by the end of 2018.
What’s driving a booming Indian economy is a surge in private consumption by an ever-growing middle class with more discretionary money to spend. India is also now getting beyond some transitional measures made in currency exchange policy and the recently enactment of a national good and service tax.
Other factors helping India is more private investment, better productivity and a variety of structural reforms implemented by the government of Prime Minister Narendra Modi.
India’s best economic performance came in 2010 when it achieved a red hot 11.4% growth rate. But it has remained above a comfortable 6% growth rate since then — enough to keep moving this diverse nation of 1.32 billion people out of the economic backwaters it was mired within for most of the previous century.
India has an advantage over China in that its economic system is more open to private enterprise, unlike China where the government is in direct or indirect control over every business venture. Observers say this makes it harder for China to innovate.
India, by contrast, encourages free market entrepreneurship by private companies who tend to be highly innovative compared with the Chinese government-controlled business model.