A prosperous India is crucial for a prosperous World. After an unprecedented mandate to the Modi government in 2019 elections (consecutively for the second time), the expectations and hopes from India, both at the domestic and global levels have risen to a new scale. Some discussions around the Indian economy and fluctuations in its GDP growth rate are going on. But according to the IMF’s latest estimates, amid the global environment of uncertainty, India retains its rank as the world’s fastest-growing major economy, with a projected growth rate of 6.1 percent for the current fiscal year. The World Economic Outlook report released by IMF in October projected the Indian economy to again pick up a 7 percent growth rate in 2020. India is the world’s third-largest economy in terms of purchasing power parity (PPP) next after China and the USA and the fifth largest country in terms of nominal GDP rankings.
It is interesting that some business and media experts in India are criticizing the government for the things like quarterly fluctuations in the GDP growth rate, slowdown in the auto industry (which is the result of a shift in buying patterns of consumers globally), and Job creation (while some 80-85% of Indians are self-employed), on top of that some regular worrisome comments of ex financial authorities/advisors are catching the front headlines. Most interesting of these comments came from a former Union Finance Minister of India, P Chidambaram (who is out on a bail on some high profile corruption charges) in a press conference he said: “Government is clueless on economy; it is stubborn, mulish in defending catastrophic mistakes like demonetization, flaw GST.” He recently penned an opinion article that concluded with the statement that “India’s economy is being run without the aid and advice of competent economists.” And “Running an economy without reputed economists — and through incompetent managers — is the same.” By making this argument, former Finance Minister of India has made it necessary to have a quick overview of what was the scenario of the Indian economy when these ‘reputed economists’ were in charge.
Ten years long UPA (United Progressive Alliance- a coalition of left and centre-left political parties in India) rule is often remembered as one of the worst periods in the economic history of India and some people called that era (2004-14) a decade of economic destruction of the country. According to the contemporary articles of S Gurumurthy, an eminent economist and present part-time Director of Reserve Bank of India “during the UPA tenure, the current account deficit topped $360 billion, and it knocked off the value of Indian rupee by almost half.” In 2004 when the UPA government started the “rupee was 45 to a dollar and it fell to almost Rs 68 to a dollar by August 2013.” Moreover from 2009 to 2014 when UPA-II was in power, the average rate of inflation in the country was 10.4%. A series of high profile corruption cases and mega scams had put the Indian economy on the verge of “internal and external bankruptcy.”
During that time, India was one of the members of the Fragile Five club and the global sentiment was that the ‘I’ in the BRICS would soon collapse. In the article “UPA policies weakening India and enriching China” published in August 2013, Gurumurthy wrote: “Who gained from India’s loss? Not America, nor England, Germany, France, Japan, or Russia – countries friendly to India. It is China.” He referred that the UPA was “the architect of the huge deficit syndrome with China” and further “the trade deficit with China ($175 billion) weakens the Indian Rupee and Indian economy and strengthens the Chinese economy”, which was a big “economic and geopolitical blunder” of the UPA government.
It is quite evident that the ‘reputed economist’ under a failed leadership cannot do a miracle for the economy but the so-called incompetent managers under a visionary leadership can certainly turn all the negatives into positives. Today, the overall picture of the Indian economy is positive and its fundamentals are stronger than ever. India has a continuing and fiscally responsible government, and in the last five years all macro-economic parameters i.e. inflation, current account deficit, fiscal deficit, etc. have been brought down to satisfactory levels. The way India has kept the inflation under control while maintaining a high growth rate is an example for many developing countries of the world.
A country which was plagued by reform inertia and policy paralysis for decades has seen some of the most bold moves in a span of just five years such as Demonetization, Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), FDI-related reforms, simplification of labor laws, lowering of taxes, EODB reforms, reforms in the power sector, asset monetization and asset recycling in public sector, reforms in banking, insurance, and pension, etc., there is no sector of the Indian economy where the reforms are not introduced.
The socio-economic reforms of the Modi government and the Speed and Scale at which they are planned and executed reflect that the goal of the Bharat is not merely to survive but to thrive on every sphere.
Bharat is going to become the third-largest economic power, in the coming few years and the five trillion dollar economy goal (by 2024-25) would be the first milestone that it has to achieve.
Economic growth and development of any democracy do not depend on the government alone, from industry to society to common man, everyone plays an active role in it. Prime Minister Narendra Modi perfectly summarized the current scenario of India when in a recent investors’ meet he said:” Today, the growth vehicle in India is running on 4 Wheels with new thinking and a new approach. One Wheel is Society, which is aspiring. The second Wheel is Government, which is Encouraging for New India. The third Wheel is that of Industry, which is daring and the fourth Wheel is of Knowledge, which is sharing. Thus, on these 4 wheels, we are moving at a fast pace.”
One of the least discussed facts on India’s real GDP growth is the trajectory of its fastest-growing cities. According to the report of the research institute Oxford Economics (published in 2018), all the top 10 fastest-growing cities by GDP between 2018 and 2035 will be in India. These top 10 vibrant cities of India are- Surat, Agra, Bengaluru, Hyderabad, Nagpur, Tiruppur, Rajkot, Tiruchirappalli, Chennai, and Vijayawada.
The first paragraph of the Indian Constitution starts with the line “India, that is Bharat” and today this statement can be seen as an interesting reference point to examine the shift in the approach to the economic growth of the country. From 2014, India is working with the perspective of ‘Bharat’, and an aspirational Bharat is emerging, whose foundation is stronger than ever.