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Monday, 18 January 2016 17:26

How India Gives New Hope to the World Economy in Depression.

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Latest Moody ratings, which in the past has been been very critical of this country, have projected India as the only shining economy in the declining world growth. It is expected to grow at the rate of 7.9 percent which is the highest in the world that too when the world economy is all set to grew at approximately 2 percent. India is the only golden bricks month the BRICS economies. The country is not only one of the most attractive destination for foreign investment, but also at the cusp of a major economic revolution brought by its own home grown entrepreneurs. India is attracting the foreign investors in flocks both in its stock market as well as in the area of direct investment. Most of the Indian states are competing with each other to attract the best of FDI and some of them have been growing in double digits for several years. The pace of Infrastructure development has never been so fast and the youth of India has never been so optimistic about the prospect of their country playing a major role in world economy and politics.

Economic growth in the U.S. is cracking under the strain of global slowdown. Francis Hollande has just declared a state of economic and social emergency. The global stock market has lost more than USD 3 trillion in last one week. The greatest shockers has come from the Chinese date which used to be the darling of world economic growth engine. for the first time since 1990, Chinese economy will grow at a lower rate than 7 percent. The trade data released by Chinese authorities has further disappointed the investor across the world. There is no reason to believe that China can still grow at the rate above 7 percent. The depreciation of yuan has given some relief to Chinese exporters, but the data still look pessimistic for many investors. The real estate market has slowed down and if government stops interfering, it may be slated for a hard landing. Stock market is now under the supervision of Public Security Bureau and if anything goes against the desired result, the trading can be halted immediately. people are not allowed to seek their shares.

In order to bring a new strategy, the Chinese Premier Li Keqiang is seriously considering to replace his chief economic advisor with the Mayor of Chongqing who has led the economy growth in this centrally administered city at fastest rate in China for almost eight years. But its seems a rumor only as the Mayor happen to be an important ally of disgraced leader Bo Xilai who is now serving life term. Chinese public sector is running more than 60 per cent of over capacity and the new roads proposed by China can only be made only in the regions such as Pakistan and Afghanistan where China is trying to establish its geo strategic  doctrine of creating a sphere of influence and unlimited dominance. The so called New Normalsin Chinese economic growth is indicator of the reality that the engine has run its course and a new development model is required to sustain the growth rate any further.

It is not just a coincidence that India has woken up at right time and trying to find its right place in the world economy. The world economy has only exploited the cheap labor available in China, Vietnam and other South and South East Asian countries. There has been very slow progress on value addition on the products made in Asian countries except Japan, S. Korea and Taiwan. Unlike China, India has been reluctant to open its economy to cheap manufacturing coming in the form of FDI which has mainly gone to China. The experience of China as a processing hub has been a very mixed experience and the price paid in terms of environmental degradation has been incalculable.  China has not realized the technology spillover it expected from the amount of FDI it received, and out of the goal amount it received, more than 70 percent of the fund were domestic capital rerouted from Hong Kong.

Today, India is hailed for its current economic reforms and investor friendly policy environment under the leadership of the New Prime Minister Narendra Modi. The Indian Prime Minister is one of the most travelled leader in the world and his vision for India has been well received across the continents by leaders and investors equally. He has been able to change the image of our country from being a rape capital to the center of new opportunities. There is a popular saying among the investor communities today that if you are not in India today, you are missing a great opportunity.

As per the macro data released, overall financial indicators are in stable phase and the fiscal deficit is right under the control. The Prime Minister of India has provided all the right leadership at the very right time in our history by guiding the millions of Indian youth to think of creating an innovating economy and not a copy cat which china has been doing for more than three decades. Despite all the criticism to the political philosophy of the current ruling government led by Shree Narendra Modi, Indian economy has got the right momentum and heading to a very healthy direction steered by its services and manufacturing  growth. The Make in Indiacampaign has brought the whole world knocking our door for new opportunities in our market. India is one of the worlds largest consumer market which has been not  yet exploited. Its a market of 1.25 billion people which is yet to be opened to world.

The launch of Digitial India, Skill India, and now Startup India is noting less than a reigniting the flame of Indian civilization for which the country has been well respected for centuries. Apart form its philosophy and religion, India has been always the source of new knowledge and scientific experience. It is only in its recent history that the country was bogged down by imperial design of western powers and her resources were looted for hundred of years and the country was left bankrupt with a load of savagery and famine like situation when the foreigners decided to leave the country to its domestic rulers led by congress party. Under the rule of congress India made progress on various fronts such as democracy and human rights, but on the economic front it led India to closed economic model with very little share in the world trade. Now the current prime minister first and foremost agenda is to make India as one of the major hub of global manufacturing. For which, India has all the ingredients and the business cycle is in Indias favor too. As the experience of China suggests,  If we continue with current pace of reform and policy measure to push the economic growth up to double digit level, India will be able to achieve the target of becoming a USD 20 Trillion economy by 2050. But all of this will be achievable under a politically stable India where people come forward take risk and make their own contribution to the India Story.

 

Note: This short commentary is an editorial comment from the desk of the director, The BRICS Institute New Delhi.

 

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