India is one of the most rapidly developing countries in the world by proving its mettle in almost every area of development. Be it the Gross Domestic Product (GDP), the size of the economy, or the number of unicorns, Indians are keeping those numbers higher than any other developed countries. But, like night follows the day, and every coin has two sides, the flashy ‘India Rising’ story has a darker side.

Here we peek into the dark side of the story that is worth a trillion dollars. It is true that India is one of the fastest-growing economies in the world and holds the fifth position in the world GDP ranking. But there are serious challenges that could hamper the economic growth of the country.

Let’s look at these significant challenges one by one.

• Lower Per Capita Net National Income: India’s per capita Net National Income (NNI) is $6,461, taking the country to the 128^th world rank in per capita income. This world ranking is that of one of the poorest nations in the world.

• Higher Unemployment Rate: Despite rapid economic growth, a higher unemployment rate is a severe issue in India’s rural and urban areas. The fast-paced economic growth has left unskilled workers behind, and they are struggling to find work in promising industries. As a result, India’s unemployment rate of 6.4% surpasses the world average unemployment rate of 5%. As per a recent UN report, India ranks number 132 among 191 countries on Human Development Index. The index’s parameters include health, education, and per capita income.

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• Higher Inequality: The higher the inequality, the higher the threat to sustained economic growth and the socio-economic fabric of the society. World Inequality Data reveals an exponential rise in economic inequality in India over the past few decades. The data also states that the gap between rich and poor is among the largest of several peers and developed economies worldwide.

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• The Lack of Basic Amenities: This is another crucial challenge for an Indian citizen. India is poor in terms of social and economic overhead capital. Social capital includes investments in education, healthcare, and law, while economic overhead capital includes infrastructural facilities such as roads, telecommunications, and energy.

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By the way, the dark side of the ‘India Rising’ story has a pinch of hope in it. In truth, the challenges in the Indian economy are opportunities in disguise. Despite these challenges, India still holds the fifth rank among the developed economies in the world. If India overcomes most of these challenges with its youthful population, nothing can stop it from becoming a world superpower at the fastest pace.

Happy Investing!

Neeru Seal

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Alpha Research