There is now a consensus among analysts that there are only a few bright spots in the global economy, and India is one of them.
India has a number of things going for it. First, it has a stable government after many years, with a huge mandate not only for economic growth but for removing the innumerable structural rigidities and reams of red tape that have plagued the economy over the decades. This mandate, in theory, gives the Indian government the opportunity to pursue its vast untapped economic potential.
Prime Minister Narendra Modi has recognized this once-in-a-generation opportunity. Most notably, the government’s investor-friendly programmes include Made in India, which for the first time offers a platform for global business and Indian industry to collaborate closely.
Second, from a macroeconomic perspective, India is positioned much more favourably for the future, even when compared to China. Growth accelerated this year to around 7.5%, putting the country on course to overtake China by the end of 2016. It is no wonder that India jumped 16 places in the World Economic Forum’s latest competitiveness index to 55. China remained steady at 28, whereas Brazil fell 18 places to 75. It is clear that India is no longer considered part of the “fragile five” emerging economies, as it was just a few years ago.
No smooth sailing
However, it’s not entirely smooth sailing just yet. In order to continue on this path, India must carry on building foreign investor confidence, something that has been more variable in recent months.
The government, just over a year in power, is navigating the complex political system and is learning to find its feet among a chorus of competing socio-political pulls and pressures. It will be important for the government to remained focused on what captured the imagination of hundreds of millions of young Indians to vote for the current government: stability, good governance and the opportunity to be counted among the prosperous and dynamic nations of the world.
Based on pure fundamentals, India’s outlook is promising; the art is in navigating the inevitable social, political and cultural complexities of the world’s largest democracy.
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Author: Viraj Mehta is head of India and South Asia for the World Economic Forum
Image: A Bengal tiger. REUTERS