Newsletters
📈 From 1 AD To Today: A 2000-Year Story Of India's Economic Rise
There's a nice review of India's economic trajectory over the last two thousand years by Sanjeev Sanyal in Swarajya.
It is a tour de force of how India's economy changed over the ages and gives you a good perspective on how to think about the future.
India at #3 by 2026/27: The Indian economy (nominal GDP) is tantalizingly close to Japan's USD 4.1 trillion. And Germany is at USD 4.6 trillion. We'll beat both in the next three years.
While this will make us the world's third largest economy, our per capita income levels will still be low.
Nevertheless, we have to appreciate where we came from and our future economic trajectory.
The Angus Maddison estimates: During 1 AD, India's economy was pegged to be 33% of the world's (on PPP basis).
China was at 26%, Western European (read Roman empire!) at 11%.
This was when Roman policy-makers were complaining about the current account deficit with India.
By 1000 AD: India was at 29%, China at 23%, Europe after Rome had fallen to 9%, and Africa (led by Egypt) was at 12%.
The Turko-Mongol invasions and the plagues: After 1000 AD, the world's economy was stuck by two massive disruptions.
By 1500, China's Ming Empire managed a 25% share of the global economy - India's economy had declined to 24.5% - this was when the Vijayanagar Empire held sway and large parts of the north had been conquered by Turko-Mongol invaders.
In just 100 years, India's share declined even further - to 22.6%. Vijayanagar had been sacked, and the Mughals had disrupted large parts of the Indian economy.
By 1600, Western Europe, led by Italy and France, contributed 20% of the global economy - thanks to the Renaissance and overseas maritime discoveries.
Continuing decline: By 1820, while China held a share of 33% of the global economy, India was at a mere 16%. Western Europe had risen to 23.6%.
The West had stolen a march and contributed 33.5% of the world economy between 1870 and 1913.
India went from 16% to a mere 8% in 1919. China, on the other hand, had it worse. They had gone from 33% in 1820 to a mere 9% in 1913.
India and China had declined even further by 1950 - they were at 4.2% and 4.5%, respectively. From contributing nearly half the global economy to less than 10% in just two centuries!
How India, China + US Economies Evolved: The US entered the 1910s with a share of 19%, and by the end of the Second World War, it had contributed 27%.
US' share of the global economy has been on a downward slide since then, reaching 21% in 1980.
But in the same period (1980) India and China contributed a meagre 3% and 2.3%, respectively.
China's turn around: 7.2% share by 2000, and by 2017, it equaled the US's share of 16%, per IMF estimates.
India's climb back: India's share is projected at 9.2% of the global economy by 2030.
We went from just 3% in 1980 to 4.3% in 2000. By 2024, our share is projected to be 8%.
We're already the world's third-largest economy by PPP terms.
By 2030, we should be at 9.2% (IMF)—a little more than what we were in 1919 (Maddison estimate).
Parting shot:
"While we rightfully celebrate the recent turn of fortune, it is also important to remember that we have a long way to go before India recovers its historical place in the world."
Sanjeev Sanyal is member, Prime Minister's Economic Advisory Council (PM-EAC).
