The Economist newspaper of London, highly respected worldwide for its expertise and views on the global economy and issues, has predicted India to lead the economic recovery process as the fastest growing major economy.
The paper refers to the India growth story in comparable terms to the remarkable rise of American economy in the nineteenth century. Reminiscent of the days of robber barons, railroad magnates, steel tycoons and fabulously rich bankers and financiers, India is witnessing an entrepreneurial revolution. We have our Mukesh Ambanis, Gautam Adanis and start-up billionaires who are straddling the global scene with ease. It short, it says, there is an “epic” quality to the entire development story.
In a cover story on the country, The Economist has pointed out four pillars of the forthcoming growth boom in the country in the next ten years: first and foremost, the emergence of a single national market; secondly, expansion of industry stemming from the shift in global supply chains network. At long last, India is set to become a manufacturing hub with some of the policy changes and incentives in place, like the PLI scheme.
Thirdly, the magazine stresses, the continued pre-eminence in the IT industry and the growth stimulus that this should provide to the overall economy. As we are witnessing the technology is proliferating in diverse fields and this should offer rising further opportunities.
And lastly but most important, the creation of a national safety-net for the poorest and most vulnerable using the high-tech framework that transfers all benefits directly to the targeted groups without leakages. This not only ensure a kind of safety-net for the vulnerable, but it also enlarges the market in the country, admittedly by a small margin.
As is well -known and even admitted, only 10 per cent of the intended benefits used to reach to the targeted groups as “cuts’ were taken away by politicians and lower-level functionaries in panchayats and similar structures.
The magazine has made a technical analysis of the factors working in favour of India’s continued growth trajectory. The briefing on the subject published in the paper refers to various tax to GDP ratios and other data like profits of leading companies in companies in comparison to their compatriots elsewhere in the world.
It has made some explosive political commentaries as well, as risks and some favouring factors. The paper has pointed out that experts and others have chosen not to make public admissions about recent achievements of India for risk of being interpreted as an endorsement of the Modi government. Because of the so-called nationalist “Hindu” bias of the Modi government, people have refrained from admitting the positive developments.
Coming up front, the paper has observed: “Indeed, one of the reasons India’s performances is less admired and people are reluctant to highlight it lest they be seen as endorsing Mr Modi”. The paper feels there is a threat that Modi poses to the country’s “democratic nature” which worries people inside as well as outside. What underpins the success is the government’s realistic approach in introducing changes and reforms. Second best policies and measures when implemented with vigour can be much better that “immaculately planned” ones which never happen.
The paper has noted that the tax reforms, along with other initiatives, have created a large integrated national market which is spurring demand and sales.
In simple terms, when you see someone is paying at a milk kiosk or a grocery shop through Paytm or Phonepay this is much better than paying through hard cash. This means a formalisation of economic activity and using modern financial system than informal tax-dodging old ways. Such things will instantaneously do two things: first, it creates a uniform seamless market for goods and services throughout the country using some universal payments mode. This is the so-called formalisation of the business.
Secondly, this also means marginal increase in government’s take on economic activity. Formal transactions leave a little tax revenue with which governments could carry on its welfare dole outs to investments in creating social infrastructure.
As an example, the paper has cited that the length of the national highways is half as much longer in the last few years than before 2014. The number of domestic air passengers has doubled and airfreight volumes are also higher by half. There are three times as many mobile phones base stations catering to nearly 800 million broadband subscribers.
In addition, the digital backbone —the so-called India Stack— with Aadhar, UPI, bank accounts offer a unique advantage in government to people interface.
The conditions have provided the ground for India’s own companies to grow bigger and bigger. Consequently, they have the finial pauses to think big and nurture their ambitions and global sales of operations.
These factors are also nurturing the start-ups which play a vital role in elevating the technology base and help economies on costs. There are of course, serious lacunae and threats, as with all good stories. Chauvinism and incendiary politics are cited. But overall it is good news and a kind of endorsement of the growth path if not the politics of it. (IPA Service)