NEW DELHI: Despite being the fastest-growing economy in the G20 and recording growth rates that exceed those of China, India’s overall economy remains a fraction of China's, the Economic Survey highlighted on Monday.
The Chinese domination over the global supply chains across product categories is a key global concern, especially in the wake of supply disruption accompanying the war in Ukraine, the report said.
"Even though India is the fastest-growing G20 country and is now recording growth rates that outpace China’s, India’s economy is still a fraction of China's," the report added.
In the context of energy transition, the Economic Survey said that China's near-monopoly over the production and processing of critical and rare earth minerals has already been a cause of global concern. It will also have significant repercussions for India’s renewable energy programme, which is vulnerable because of its massive dependence on imported raw materials.
India is facing questions like : (a) Is it possible to plug India into the global supply chain without plugging itself into the China supply chain? and (b) what is the right balance between importing goods and importing capital from China? As countries attempt to reshore and friendshore, India’s policy choices concerning China are exacting, according to the Economic Survey.
India is gaining market share in global exports of goods and services. Its share in global goods exports was 1.8 per cent in FY24, against an average of 1.7 per cent during FY16-FY20. Similarly, its share in global services exports rose to 4.3 per cent in FY23 from an average of 3.3 per cent during FY16-FY20, the report stated.
In addition, the Survey highlighted that India's external sector is being effectively managed, characterized by comfortable foreign exchange reserves and a stable exchange rate. As of the end of March 2024, India's foreign exchange reserves were adequate to cover 11 months of projected imports and exceeded 100% of the total external debt.
The Indian Rupee has exhibited one of the least volatile performances among its emerging market peers during the fiscal year 2024. Indicators of external debt vulnerability remain favourable, with external debt as a percentage of GDP recorded at a low 18.7% as of the end of March 2024. The ratio of foreign exchange reserves to total external debt was noted at 97.4% as of March 2024, it added.