Making India world’s top economy

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Making India world’s top economy

Sunday, 20 February 2022 | SUDHIR HINDWAN

Although China’s high saving rate, better infrastructure and their manufacturing are way ahead of India, these cannot match the prowess of India’s services-driven industry and its institutional stability, deeply interwoven in pluralism and democracy

The recent economic data projection on India’s GDP growth rate for FY 21-22 to be 9.2 per cent is a good indicator of its economic prowess. The IMF has indicated India’s growth about 9.5 per cent which augurs well for its further economic prospects. Renowned strategic affairs expert K Subrahmanyam said security does not only mean protection of a country from internal and external threat but ensuring that the country is industrialised rapidly and has a cohesive egalitarian and technological society. The role of trust creation and a process of good governance in a multi-cultural society like India provide the vital bond that can create miracle. India has that bond very well intact.

However, all this has come about due to incredible amount of hard work and zeal which the leadership has shown despite the spike in Covid-19 pandemic. Even as major economies of the world witnessed slowdown, economic growth has remained resilient in India. However, the major challenge before the Indian Government remains the need to create more employment since the number of the unemployed and the underemployed has increased over the years. Rapid globalisation has brought forward a new syndrome of “perform or perish”.

Surely the syndrome is affecting public sector enterprises and businesses the world around. Although the abundance of cheap labour and the initiative towards FDI (foreign direct investment) have made certain economies with a promising prospects, the strong foundation and tremendous trust generated by Indian banking, public and private sector units provided a much needed impetus during the worst spikes of pandemic.

Although initially India was not very aggressive in its economic reforms, it gradually started creating inner web of confidence building measures to provide not only economic growth but also ensure the development of each section of society, thus, coming out with a framework of socio-economic justice that helped in building trust.

Also, catching on export-oriented special economic zones, the country soon started enhancing world trade, which was in the beginning hardly 0.7 per cent. The process of strengthening medium-term export strategy proved to be a strategic effort for India during 2002-2007. Besides, the resolution in 1991 gave another boost to the Indian economy. Although FDI is considerably higher in certain east Asian tigers and China, the investment returns are far greater in India due to its superior corporate pattern of clean governance and the high quality of commercially driven companies. Numerous Indian business experts and investors have carved a niche for themselves overseas particularly in the field of information technology, biotech, pharmaceuticals and health-care where even advanced countries need to still catch up.

Besides, India’s indigenous entrepreneurs and industries certainly give it a huge advantage over higher level of FDI of other leading economies of the world. For example, the Chinese export-led manufacturing progress is mainly based on FDI, which is hardly a substitute for home-grown entrepreneurship. India’s strength lies in creating its internal markets as it already has a fast growing middle class. Financial dealings are not as simple as they appear to be and require constant monitoring by competent authorities. The malfunctioning of the financial system in Japan during the last couple of years or so turned out to be pernicious for the country. This problem can be compounded by the lack of matured markets which are at times depressed and sometimes buoyant for no apparent reasons. Besides, India has brought forward all necessary requisites required for good, business friendly environment for investors across the globe.

Undoubtedly, China’s high saving rate, good infrastructure and their manufacturing is way ahead of India, but this cannot be compared with India’s services-driven industry prowess and its institutional stability, deeply interwoven in pluralism and democracy. Recently, there has been a revolution in the process of opening up of start-ups as they have crossed the landmark of more than ten thousand providing a huge impetus to employment generation during the last five years alone. According to a recent report of NASSCOM, the robust strategy of start-ups have created more than one lakh both direct and indirect jobs. The strategy to enhance its operational and support network, ranging from rural to urban areas, India ensured a much higher rate of return on assets. India also made magnificent strides in a number of areas, including knowledge and skill-based intensive services such as telecommunication, pharmaceuticals, biotechnology, professional services of doctors, teachers and management professionals, etc.

India is also emerging as the first choice for foreign investors who are gradually pumping in a huge amount, more than $60 billion in the Indian stock markets with about 260 new foreign investors having registered with the stock market regulating body (SEBI) during the last two decades or so. In addition to this, as many as 600 new investors were granted permission to trade on the Indian stock exchanges consequently leading to 125 per cent growth in the Sensex and 148 per cent rise in Bombay Stock Exchange.

The stupendous progress of India in the IT industry has opened a new era of Indian companies aggressively capturing overseas markets. The ambit of compliance and regulatory authorities also provide economic security as nothing gets undetected. Foreign investor sentiments can further be enhanced by creating permissible ease in the tax rates and the existing protocols without compromising on security. Doing this would not only save paperwork, taxes and time for the typical investor, but also further ease their decision in settling for India for business destination as a first choice.

(The writer, a recipient of Bharat Gaurav Award, is a professor and expert on strategic affairs)

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