• Pooja Ambala

Indian Economy vs Canadian Economy

Updated: May 12

To properly understand the standings of both Canadian and Indian economies, let's look at both the economies starting with Canada.

As a trillion-dollar high-tech industrial society, Canada is similar to the United States in terms of its market-oriented economic system, production pattern, and affluent living standards. Since WWII, the manufacturing, mining, and service sectors have grown dramatically, transforming the country from a largely rural economy to primarily industrial and urban. With the United States as its leading trading partner, the 1989 US-Canada Free Trade Agreement (FTA) and the 1994 North American Free Trade Agreement (NAFTA) (which includes Mexico) sparked a dramatic increase in trade and economic integration. Canada has a large trade surplus with the United States, consuming roughly three-quarters of Canadian exports each year. Canada is the United States' largest foreign energy supplier, including oil, gas, uranium, and electricity. From 1993 to 2007, Canada's economy grew thanks steadily to its abundant natural resources, highly skilled labour force, and modern capital infrastructure.

The economy was thrown into a sharp recession by the global economic crisis in the final months of 2008, and Ottawa posted its first fiscal deficit in 2009 after 12 years of surpluses. Due to the financial sector's tradition of conservative lending practices and strong capitalization, Canada's central banks emerged from the financial crisis of 2008-09 as among the strongest in the world. In 2010-12, Canada experienced marginal growth and planned to balance its budget by 2015. Furthermore, Canada's petroleum sector is rapidly expanding, with Alberta's oil sands significantly increasing the country's proven oil reserves, placing Canada third in the world behind Saudi Arabia and Venezuela.

In 2020, Canada's GDP was $1.64 trillion, making it the ninth-largest economy.

With the world's third-largest proven oil reserves, Canada has a well-developed energy extraction sector. Canada's manufacturing and service sectors, primarily concentrated in urban areas near the US border, are also impressive.

Because of Canada's free trade agreement with the United States, three-quarters of Canadian exports go to the United States each year. Because of its close ties to the United States, Canada has grown in lockstep with the world's largest economy.

The nominal GDP for 2020 is $2.66 trillion in current US dollars.

PPP 342020 Gross Domestic Product (GDP) Adjusted in Current International Dollars: $8.97 trillion GDP Growth in 352020: -7.3 percent In current US dollars, the nominal GDP per capita for the year 362020 is $1,927.737.

Canada is the second-largest country in land area and has the world's tenth-largest economy. Despite a corruption scandal that tarnished Prime Minister Justin Trudeau's political brand, his Liberal Party won a second term in office in the October 2019 national elections. Despite remaining in power, Trudeau was forced to form a minority government that was inherently unstable and could fall apart well before the next election in 2023. The market-oriented economic system of Canada is very similar to that of the United States. Automotive and other manufacturing, forest products, minerals, and petroleum are leading industries. Because the United States accounts for roughly three-quarters of Canada's exports, the new United States–Mexico–Canada Agreement, which took effect on July 1, 2020, is critical to the country's economic survival.

Property rights are generally well protected under the law and through contract enforcement. Expropriation is a rare occurrence. The judiciary is self-contained, and courts are thought to be procedurally competent, fair, and trustworthy. In 2020, a government education contract kickback scheme allegedly involving the prime minister's family tainted Canada's reputation for clean government and low corruption.

The top personal income tax rate is 33%, while the maximum corporate tax rate is 15%. Value-added and property taxes are examples of other taxes. The total tax burden amounts to 33.0% of total domestic income. Over the last three years, government spending has averaged 40.9 percent of total output (GDP), with budget deficits averaging 0.3 percent of GDP. The national debt is equal to 88.6% of GDP.

Canada's business freedom has remained relatively unchanged and at a high level. The recovery rate during insolvency proceedings, on the other hand, has decreased slightly. Labour laws differ from one state to the next. There is a scarcity of skilled tradespeople. Aside from health care, the government provides large subsidies to various industries, including energy and agriculture.

There are 15 preferential trade agreements in force in Canada. There are 459 non-tariff measures in place, with a trade-weighted average tariff rate of 3.1 percent. The government has set limits on foreign investment in specific sectors, such as aviation and telecommunications. The banking sector, dominated by six central banks, is still healthy. In a prudent regulatory environment, many nonbank financial companies operate.

Now let's talk about the Indian economy,

India is transitioning to a free-market economy, but its previous authoritarian policies remain remnants. Economic liberalization measures, such as industrial deregulation, state-owned enterprise privatization, and decrease in controls on foreign trade and investment, started in the early 1990s and have helped accelerate the country's growth, averaging less than 7% per year since 1997. Traditional village farming, modern agriculture, handicrafts, a huge range of modern industries, and various services are all part of India's diverse economy. Agriculture employs slightly more than half of the workforce. Still, services are India's most important source of economic growth, accounting for nearly two-thirds of its output while employing less than one-third of its workforce. Thanks to its large educated English-speaking population, India has become a significant exporter of information technology services, business outsourcing services, and software workers. The Indian economy rebounded strongly from the global financial crisis in 2010, thanks mainly to strong domestic demand, and real growth exceeded 8% year on year. However, in 2011, India's economic growth slowed due to a reduction in government spending and a drop in investment, both caused by investor scepticism about the government's commitment to further economic reforms and the global situation. High international crude prices have exacerbated the government's fuel subsidy expenditures, contributing to a more significant fiscal deficit and worsening the current account deficit. To reverse India's slowdown, the Indian government announced additional reforms and deficit-reduction measures in late 2012, including allowing higher levels of foreign participation in the economy's direct investment.

Due to a young population and low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy, India's medium-term growth outlook is positive. Poverty, corruption, violence, and bias against women and girls, an inefficient power generation and distribution system, enforcement of intellectual property rights that are not effective, decades-long civil litigation dockets, inadequate transport and agricultural infrastructure, limited non-agricultural employment opportunities, and insufficient availability of quality primary and higher education are all long-term challenges that India has yet to address fully.

The nominal GDP for 2020 is $1.64 trillion in current US dollars. PPP 492020 In current international dollars, adjusted GDP is $1.83 trillion. GDP Growth in 2020: -5.3 percent In current US dollars, the nominal GDP per capita for 512020 is $43,258.252.

India is the world's sixth-largest economy, with a GDP of $2.66 trillion in 2020, down more than 7% from 2019. India has the lowest per-capita GDP on our list due to its large population.

Traditional village farming and handicrafts coexist with booming modern industry and mechanized agriculture in India's economy. India is a significant exporter of technology services and business outsourcing, with the service sector accounting for a substantial portion of the country's GDP. Since the 1990s, India's economy has been liberalized, but limited business regulation, widespread corruption, and persistent poverty pose challenges to the country's continued expansion.

Covid's impact on Indian economy:

In India, the COVID-19 pandemic has had an essentially disruptive economic impact. According to the Ministry of Statistics, India's growth slowed to 3.1 percent in the fourth quarter of 2020. According to India's Chief Economic Adviser, the drop is primarily due to the impact of the coronavirus pandemic on the Indian economy. also to bring to your notice that, India had been experiencing a pre-pandemic slowdown, and the current pandemic has "magnified pre-existing risks to India's economic outlook," according to the World Bank.

India's growth for FY2021 was initially revised downward by the World Bank and rating agencies, resulting in the lowest figures India has seen in three decades since its economic liberalization in the 1990s. However, after the financial package was announced in mid-May, India's GDP estimates were revised downwards even further, signalling a deep recession. (During this time, over 30 countries' ratings have been downgraded.) CRISIL predicted on May 26 that this would be India's worst recession since independence. According to State Bank of India research, the GDP contracted by more than 40% in Q1. The contraction will not be consistent; instead, it will vary depending on various factors such as state and sector. The Ministry of Statistics released GDP figures for Q1 (April to June) FY21 on September 1, 2020, showing a contraction of 24% compared to the same period the previous year.

Economic activity fell from 82.9 on March 22 to 44.7 on April 26, according to the Nomura India Business Resumption Index. Economic activity had nearly returned to pre-lockdown levels by September 13, 2020. Unemployment increased from 6.7 percent on March 15 to 26 percent on April 19 before falling back to pre-lockdown levels by mid-June. An estimated 140 million (140 million) people lost their jobs during the lockdown, and many others saw their salaries cut. Across the country, more than 45 percent of households reported a decrease in income from the previous year.

During the first 21 days of complete lockdown, which was declared in response to the coronavirus outbreak, the Indian economy was expected to lose over 32,000 crores (US$4.2 billion) per day. Less than a quarter of India's $2.8 trillion economic movements were operational while the country was under complete lockdown. It was estimated that up to 53% of businesses would be significantly impacted. With the lockdown restrictions in place, supply chains have been put under strain; initially, there was a lack of clarity in defining what constitutes an "essential" and what does not. Those in the informal sector and those on a daily wage have been the most vulnerable. A large number of perishables farmers across the country were also facing uncertainty.

This year, Canada's economy remains among the freest, where it has been since 2015 when it was demoted from the free category. The simplest way for the government to improve economic freedom is to reduce government spending, which would raise the Index indicator's meagre score. Labour freedom would be increased by reforming labour laws to create a more flexible labour market.

Currently, Canadian budget revenue is more than that of India, but Indian GDP is more than that of Canada, and the government debt is very close in numbers. So as of now, we can conclude that Indian and Canadian economies are very similar and keep interchanging between ranks.