India’s economic prowess and IMF forecast
The recent International Monetary Fund (IMF) forecast showing a promising growth of India varying between 7.4 per cent and 7.8 per cent for 2018-19 and 2019-2020 respectively augurs well for the country.
Earlier, the World Bank’s Global Economic Prospective Report indicating India’s expected growth of 7.3 per cent came as good omen. The predictions are very important against the background of persistent economic global depression.
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 to be the need to generate a satisfactory number of employments since the number of the unemployed and the underemployed has increased over the years.
Owing to competition, we witness a 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 initiative towards FDI ( foreign direct investment ) have made China the world’s most promising emerging economy, it is not fair to treat India and China on one category of economic reforms because changes in these countries have followed strikingly diverse and varied courses.
China has been extremely aggressive in its economic reforms and started creating export-oriented special economic zones way back in 1978. China had captured about 4 per cent of world trade share till a few years ago. India could hardly manage to get about 0.7 per cent.
However, India strengthened its medium-term export strategy for 2002-2007. Moreover, India launched its economic reforms in 1991, China had started such reforms way back in 1978.
Although foreign direct investment is considerably higher in China than in India, investment returns are better 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 China needs to still catch on.
Besides, India’s indigenous entrepreneurs and industries will certainly give it a huge advantage over Chinese FDI. 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. This problem can be compounded by the lack of matured markets which are at times depressed and sometimes buoyant for no apparent reasons.
Recently at Davos in the World Economic Forum, India 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 manufacturing are way ahead of India but this cannot be compared with India’s services-driven aggrandisement and institutional stability deeply interwoven in pluralism and democracy.
On the other hand, India has an extensive web of operational and support network, ranging from rural to urban areas that ensures a much higher rate of return on assets.
During the post-1991 era, economic reforms in India made significant 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.
According to a report prepared by Goldman Sachs published in April, 2004, in the next couple of decades or so, India and China would certainly emerge as major economies of the world.
The report also concedes that in the long run India will emerge even bigger and will gradually overshadow China.
The transformation of India into one of the world’s leading economies is a phenomenal achievement.
Foreign investors have already pumped in a huge amount, more than $23 billion in the Indian stock markets and about 245 new foreign investors have registered with the stock market regulating body (SEBI) during the last few years.
In addition to this, as many as 600 new investors were granted permission to trade on the Indian stock exchanges consequently leading to a 125 per cent growth in the Sensex and a 148 per cent rise in Bombay Stock Exchange.
According to the recent Nasscom report, quoted by Stephen David, a few years ago India controled 44 per cent of global offshore outsourcing market for software with revenue of $17.2 billion. The stupendous progress of India in the IT industry has opened a new era of Indian companies aggressively capturing overseas markets.
Notwithstanding its limitation, in all fairness it should be acknowledged that overall the Indian economic reforms represent a move in the right direction, but to leave an indelible mark across the globe we must attempt to expand the network of economic liberalisation and emerge from the shadow of criticism but of course with caution.
Economic reforms with a humane and receptive approach involving educational facilities, jobs and development of new channels of communication and FDI will certainly give birth to a new system of status evolution as an economic giant of the world.
IMF Director Christine Lagarde said India can soon outsmart China as the fastest growing economy. India has all the reasons to celebrate as it has already surpassed China and the US as top destination for FDI (foreign direct investment). Purav Jhaveri, the Managing Director of Investment Strategy at Franklin Templeton Investments, said Indian economy is poised to have better and promising trends then even the strong economies of the world.
The robust strategy of economic development of the current Indian Government has created a new vision full of promises for an extremely bright future for India.
Time is not measured by years but by what the nation is doing, how people feel and at the end what are the achievements of the country with regard to economic growth coupled with socio-economic and political justice.
Measuring by this yardstick, India has achieved great opportunities and has been able to reach several milestones both in the field of economic aggrandizement and improving scientific and technological prowess even during small span of time despite many infrastructure related issues. Needless to say India has carved a niche for itself with regard to social reforms and consumer rights.
India has made all efforts towards strengthening transparency in all spheres of life. Although some critiques are of the view that privacy and personal security may be compromised. Besides, there are challenges with regard to rigid labour market and more importantly the need for job creation and long awaited market reforms.
There has been a paradigm shift from traditionalism to modernity to post-modernity and surprisingly now post-post-modernity.
The purpose of comparison is to familiarise with key issues and debates in economic domain of developing societies with special reference to India.
There are myriad ways through which consumer rights can be protected and policy makers need to address these parameters head on.
(The author is Chandigarh based professor of political science)
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