The Economist Of London Gets Gaga On Indian Growth Story

by Anjan Roy

London’s The Economist newspaper, highly respected around the world for its expertise and views on the economy and world issues, has predicted that India will lead the economic recovery process as the fastest growing major economy.

The document refers to India’s growth story in terms comparable to the remarkable rise of the American economy in the 19th century. Reminiscent of the days of robber barons, railway tycoons, steel tycoons, and fabulously wealthy bankers and financiers, India is witnessing a business revolution. We have our Mukesh Ambanis, Gautam Adanis and emerging billionaires who are making their way onto the global stage with ease. In short, he says, there is an “epic” quality to the entire development story.

In a cover story on the country, The Economist has pointed to four pillars of the country’s looming growth boom in the next ten years: first and foremost, the emergence of a single national market; second, the expansion of the industry derived from the change in the global network of supply chains. At last India will become a manufacturing hub with some of the policy changes and incentives like PLI scheme.

Third, the magazine highlights the continued pre-eminence in the IT industry and the growth stimulus this should provide to the broader economy. As we are witnessing, technology is proliferating in various fields and this should offer new opportunities.

And last but not least, 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 target groups without leakage. Not only does this ensure a kind of safety net for the vulnerable, it also expands the market in the country, no doubt by a small margin.

As is well known and even admitted, only 10% of the intended profits used to reach target groups as “cuts” were withdrawn by politicians and lower level officials in panchayats and similar structures.

The magazine has done a technical analysis of the factors working in favor of India’s continued growth trajectory. The summary on the subject published in the document refers to various taxes on GDP and other data such as the earnings of leading companies in companies compared to their compatriots in other parts of the world.

He has also made some explosive political comments, as well as risks and some factors in favor.

The newspaper has noted that pundits and others have chosen not to make public admissions about India’s recent achievements because of the risk of being interpreted as endorsement of the Modi government. Due to the Modi government’s so-called “Hindu” nationalist bias, people have refrained from admitting the positive developments.

Going forward, the newspaper has observed: “Indeed, one of the reasons why India’s performances are less admired and people are reluctant to highlight them lest they be seen as endorsing Mr Modi.” The newspaper feels that Modi poses a threat to the “democratic nature” of the country, which worries both insiders and outsiders.

What underpins the success is the realistic approach of the government in introducing changes and reforms. Second-best policies and measures, when vigorously implemented, can be far better than the “immaculately planned” ones that never happen.

The document has pointed out that tax reforms, along with other initiatives, have created a large integrated national market that is stimulating demand and sales.

In simple terms, when you see someone paying at a milk kiosk or grocery store through Paytm or PhonePe, it’s much better than paying with cash. This means a formalization of economic activity and the use of a modern financial system than the old informal forms of tax evasion.

Such things will instantly do two things: First, it will create a seamless and uniform market for goods and services across the country using some universal mode of payment. This is the so-called formalization of the business.

Second, this also means a marginal increase in government involvement in economic activity. Formal transactions leave a small tax revenue with which governments could carry out their distributions of social assistance for investments in the creation of social infrastructure.

As an example, the document has cited that the length of national highways is half as long in recent years as it was before 2014. The number of domestic air passengers has doubled and air cargo volumes have also increased by half. There are three times as many mobile phone base stations serving nearly 800 million broadband subscribers.

In addition, the digital backbone network—the so-called India Stack—with Aadhar, UPI, banned accounts offers a unique advantage at the interface between the government and the people.

The conditions have provided the ground for India’s own businesses to grow ever larger. Consequently, they have the final breaks to think big and nurture their global sales and operations ambitions.

These factors are also encouraging new companies that play a vital role in raising the technology base and helping cost economy. Of course, there are serious loopholes and threats, as in all good stories. Chauvinism and inflammatory politics are cited. But overall, this is good news and a kind of endorsement of the growth path, if not the politics of it. (IPA service)

The Economist Of London Goes Gaga With Indian Growth Story first appeared on IPA Newspack.

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