Why India missed becoming a $3.5 trillion economy in 2017


NEW DELHI, JUNE 11: Violence cost the Indian economy a whopping $1.19 trillion (over Rs 80 lakh crore) in 2017 in constant purchasing power parity (PPP) terms, according to a report prepared by the Institute for Economics and Peace (IEP) based on an analysis of 163 countries and territories.
The amount sums up to roughly $595.4 per person.
Given that India’s Gross Domestic Product (GDP) currently stands at $2.264 trillion, it can be implied that the impact of violence caused India to miss the landmark of becoming a $3.5 trillion economy.
The condition in India is not an aberration though. The report says global economic impact of violence increased by 2.1% from 2016 to 2017. Since 2012, it has increased 16% – with the 2017 bill of violence totaling $14.76 trillion. The highest impact in absolute terms was in the US, at $2.67 trillion.
However, India’s ranking is pretty much in the pits at 136 among 163 countries, below Iran. The 2017 ranking is a notch higher than that of 2016, when India was pegged at 137.
IEP, in its report, has defined the impact of violence as the expenditure and economic effect related to “containing, preventing and dealing with the consequences of violence”.
The report makes it clear that investors love peace. In the last 70 years, per capita GDP growth has been 3 times higher in highly peaceful countries in comparison to the lesser peaceful nations.
Since 1980, on an average, the most peaceful countries received 2% of their GDP in FDI inflows, compared to 0.84% in the least peaceful countries.
On the other hand, less peaceful countries have experienced economic stagnation. Their annual per capita GDP has, on average, grown by just 1% over the last 7 decades.
The report stated that the fall in peacefulness over the last decade was caused by a wide range of factors, including increased terrorist activity, the intensification of conflicts in the Middle East, rising regional tensions in Eastern Europe and northeast Asia, and increasing numbers of refugees and heightened political tensions in Europe and the US.
(TNN with PTI inputs)