For now, we are in the Nigeria zone and should confront reality if we are to do something about it
The Indian economy is in deep trouble. Gross domestic product (GDP) growth for FY20 is likely to come in at 5%, an 11-year low. Nominal GDP growth will likely be at more than a four-decade low. Grim statistics abound. A debate about the nature of the slowdown, whether it is cyclical or structural, is ongoing. A bigger issue, however, occupies my mind. Does the public appreciate the full extent of India’s long-term economic challenges? Eminent economists and scholars are issuing regular warnings about the economy’s future. The clearest such warning has come from economists who argue that India is heading towards a middle-income trap. That is a purgatory in which middle-income countries languish as they are unable to catch up with wealthier nations. Frankly, India would be lucky to be close to the middle-income trap threshold. The reality, in my view, is far grimmer.