India’s economy slows when it was supposed to accelerate

A year ago, India was recovering from a Covid-19-induced recession with some dynamism. The country has overtaken China as the most populous country, and its leaders say India is the world’s fastest-growing large economy.

It was sweet music to the ears of foreign investors and Indian Prime Minister, Narendra Modi, who boasted at every opportunity of his country’s inevitable rise. Home to 1.4 billion people, a reinvigorated India could become an economic engine to power the rest of the world, which is stumbling in the fog of trade wars, China’s unrest and Russia’s invasion of Ukraine .

India replaces Britain in 2022 as the world’s fifth largest economy and, by next year, it is expected to overtake Germany in fourth place. But India has lost a step, revealing its vulnerabilities even as it rises in the world rankings.

The stock market, which has been soaring for years, has just erased the gains of the last six months. The currency, the rupee, is falling rapidly against the dollar, making national profits appear weaker on the global stage. India’s new middle class, whose wealth has grown like never before after the pandemic, is wondering where it went wrong. Mr. Modi will have to adjust his promises.

November brought the first shock, when national statistics revealed that the economy’s annual growth had slowed to 5.4 percent over the summer. The last fiscal year, which ran from April to March, saw growth of 8.2 percent, enough to double the size of the economy in a decade. The revised outlook for the current fiscal year is 6.4 percent.