India needs 8 percent growth to beat China.

- Despite the growth in India's economic development, the importance of China cannot be underestimated

India's economy needs to grow by 8 percent every year to overtake China. According to global agency Barclays plc, China is the most important contributor to the world economy, so India needs a lot of investment to overtake it. It is necessary to invest especially in the traditional sector. Barclays' statement came as the IMF raised its growth forecast for India for fiscal 2024 by 20 basis points to 6.3 percent, citing stronger-than-expected consumption in the April-June period. South Asian countries should focus on increasing investment in sectors such as mining, transport, utilities and storage. These are the sectors that will have the strongest impact on the wider economy.

In recent years, more attention has been paid to new industries such as telecommunications and the digital sector, and therefore investment in traditional sectors has declined. Lack of capacity in traditional sectors means that more investment is now needed in those sectors, especially the government should pay attention to it. Greater investment, especially in traditional sectors, should also have a positive impact on employment and household income, and may help policymakers formulate better policies for economic growth.

India's economy grew at an average of 8 percent in 2005-2010 and if the new government aims to maintain macroeconomic stability, it could return to that pace after next year's general elections, Barclays said in a report. This would mean that India would be in a position to become the largest contributor to global growth and narrow the gap with China.

Citing data from the International Monetary Fund (IMF), Barclays said China's contribution to global gross domestic product (GDP) is estimated to be around 26% over the five-year period to 2028. During this period, India's contribution is estimated at 16% based on GDP growth rate of 6.1%. According to Barclays, if India grows at 8 percent, its contribution will come close to that of China.

The Government of India has increased spending on infrastructure in the last few years and has allocated a record 10 trillion rupees i.e. 10 lakh crore rupees in the current financial year till March 2024. Prime Minister Modi is trying to increase India's economy from $3.7 trillion to $5 trillion by 2024-25. The government is unlikely to maintain a strong pace of investment in capital products, meaning the private sector will have to step up.

Meanwhile, unlike this report, HSBC Holdings has stated in one of its reports that despite India's impressive economic progress, India is unlikely to replace China as an engine of global economic growth in the near future. The figures obtained do not suggest so. India is currently moving forward with very few factors. While China is still so large that its importance in the global economy cannot be underestimated. The IMF expects the gap between the size of the Chinese and Indian economies to widen to $17.50 trillion by 2028. Last year this gap was 15 trillion dollars.

HSBC has taken a contrary view to that of some world analysts. Earlier this week, Barclays said that if India grows at an annual rate of eight percent, it could overtake China as the engine of global growth in the next five years. The report also notes the difference in consumption and investment between India and China.

Assuming that China's economic growth rate remains zero and growth through investment in India triples the current average, it will take another 18 years for India's investment to reach China's level. China currently accounts for 30 percent of global investment, while India's share is less than five percent. India's share of global consumption is below 4 percent, while China's figure is currently 14 percent, according to the report.