India's Economic Slowdown: What Went Wrong?

Just over a year ago, India was celebrating a strong rebound from the Covid-19 pandemic. With a population exceeding China's, the country was hailed as a soon-to-be economic powerhouse. Foreign investors and India's prime minister, Narendra Modi, were both excited about the country's future. India even surpassed Britain to become the world’s fifth-largest economy in 2022, with plans to overtake Germany by the next year. However, things have taken a surprising turn. India's stock market has erased the gains made over the past six months. The rupee is depreciating rapidly against the dollar, which makes Indian earnings seem smaller on a global scale. The new middle class, whose wealth skyrocketed after the pandemic, is now puzzled about what went wrong.

The slowdown is making countries like the United States and other international powers think twice about India's potential to drive global economic growth. Much of the world is still grappling with trade conflicts, China’s issues, and the repercussions of Russia's invasion of Ukraine. Prime Minister Modi will need to adjust his expectations and promises. The question remains: How can India regain its economic momentum and live up to its previous hype?

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