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Name: Darsh Patel
Title: Macroeconomics Term Project – India Vs USA
Table of Contents
Introduction…………………………………………………………………Pg 1
State of Economy/ Trade problem…………………………………………..Pg 2-4
Economic Analysis of India…………………………………………………Pg 4-7
Economic Comparison of USA……………………………………………...Pg 8
Chart & Analysis……………………………………………………………..Pg 9-11
Economic Solutions/ Suggestions of the future………………………………Pg 11
Conclusion…………………………………………………………………….Pg 12
References……………………………………………………………………..Pg 13
Introduction
In this paper we will try to discuss the economy of India and compare that with the biggest economy in the world which is United States of America (USA). Through this we will be able to determine the areas where India lags compared to US and where it is ahead. This will help to prepare a report and strategies to mitigate or decline the lagging sectors and progressively enhance the growth of the country. On the other hand it will be the developed nations like USA which must assist and support developing and growing countries like India financially and by providing infrastructural facilities which will eventually help to increase the progress of the nations like India in the field of education, infrastructure, medical, housing and per capita income.
State of Economy/ Trade problem
India
India is at 76th place in terms of its social mobility and is just behind Guatemala but is ahead of South Africa, Bangladesh and Cameroon. The GDP for India per capita is $2100. There are other issues like carbon emissions where India stands 130th. In terms of gender equality India stands in 112th place where it scores high in terms of political empowerment pillar but are low on economic participation, utilizing the opportunities, health and in terms of survival strategies. In terms of competitiveness and strengths which also includes market size and innovation capability India stands in 68th place as of 2020. But, in terms of human capital pillars it was held back to 109th spot out of 141 countries. Finally, India was ahead of United Kingdom and France to become the world’s fifth largest economy with a valued of $2.94 trillion (Joe Myers, 2020).
The trade problems of India are many and it was firstly due to the slowdown in the economy which impacted the Indian economy adversely. This slowdown was mostly due to implementation of Goods and Service Tax (GST), Indian Bankruptcy Code (IBC) and the real Estate Regulations Act (RERA) (Amitabh Kant, 2019). Secondly, it’s the reduction in interest rate and growth by the Government of India due to which the savings and the deposit rate have declined while the borrowing rate of interest is high. This mismatch has resulted in low demand of public deposits and as a result the banks cannot provide funds to the manufacturing, agricultural, real estate, infrastructural and construction sectors which are presently in deep trouble. Thirdly, the issue is with the unemployment rate where in India it is at 7.22% as on January 2020. It reached highest level at 23.52% in April 2020 during the advent of global pandemic covid-19 due to lockdown and job losses.
United States of America
On the other hand, United States is far ahead of India through there have been many disturbances in terms of inflation, job losses and increase in unemployment rate. Yet in terms of social mobility United States stands at 27th place but are below many developed economies like that of UK, Japan and Denmark. In terms of its GDP, US economy is the world’s largest and per the IMF data and is at $21.4 trillion as on 2019. The per capita GDP as of 2019 for US is $65100 and is much higher compared to that of India. In terms of competition USA is the second most competitive state with respect to the financial system and business dynamism. The carbon emission per capita for US is ranked 12th and is much better as compared to that of India. This is generally due to implementation and use of highly efficient and sophisticated technology by United States and the various organizations operating in the country. In terms of gender equality as per the report published by World Economic Forum Global gender Gap report United States is ranked 53rd of the 153 economies. It is political empowerment and the efficient use of labour force due to which they were able to achieve this position (Joe Myers, 2020).
As per the US economy there was deficit of $678.7 billion as per the reports from the Bureau of Economic Analysis (BEA). It was generally due to covid-19 but it is also the long term trade deficit which can hurt the US economy. If the dollar becomes strong compared to other developed countries currencies then also there can be enhancement in deficit which can be by raising export prices. Thirdly, it’s the consumer products imported from other countries by US and are the primary reasons due to which there is a deficit in trade (Kimberley Amadeo, 2021).
The greatest trade problem of United States is with China which is the USA’s largest merchandise trading partner and is the third largest export market as well as the biggest source of imports. Despite having bilateral ties with China, US have growing commercial tensions which have lead to a complex and aggressive trade relationship between the two countries. From the US perspective the ultimate problem of this tension is due to China’s incomplete shift to a free market economy. There are many state directed rules and policies in China which restricts and distorts the flow of trade and...