At the World Economic Forum in Davos in 2023, one country was often cited as a bright spot, as either economic growth dominates the discussion or the absence of economic growth in most advanced economies.
Bank of Japan Governor Haruhiko Kuroda said India was “doing very well” and highlighted the serious challenges facing neighboring Sri Lanka, Bangladesh and Pakistan.
The hype across India was partly engineered, with Indian executives, officials and investors attending in large numbers at a Swiss mountain resort (although Prime Minister Narendra Modi was not present).
But with Europe on the brink of a potential recession and US growth slowing, India shines brightly among the world’s largest economies.
and the International Monetary Fund appear China to outpace global growth again as economic activity resumes in 2023 weather The 4.4% increase in GDP is well below India’s forecast of 6.1%.Economic and Business Research Center I think India could overtake Germany and Japan to become the world’s third largest economy in the next decade, reaching $10 trillion by 2035.
Several executives from outside India attending the WEF summit, including Nokia CEO Pekka Lundmark, emphasized that India is one of the fastest growing markets.
Börje Ekholm, head of Ericsson, said 5G infrastructure is developing rapidly there.
“This is the digitization of India as a whole, to create a digital society in India,” Ekholm told CNBC. “They’re on a strong path he’s on with 4G, but now at an even faster pace he’s building 5G.”
He went on to say that India “will soon have the best digital infrastructure outside of China.” Bertie Airtel And Gio, he added.
“They are building rapidly and that will help India digitize. Compare that to what is happening in Europe and we are lagging behind.”
India also A global chip manufacturing hub, amid growing concerns over Western dependence on Taiwan. According to Indian Commerce Minister, Apple want to move 25% of iPhone manufacturing to that country (although this has not been confirmed by Apple).it is already world leader digital payments; and aims to develop in areas such as solar, wind, and green hydrogen production.
strong tailwind
“We are very optimistic and very positive about India,” Rajesh Gopinathan, CEO of Tata Consultancy Services, told CNBC.
He said the combination of a stable political environment and heavy government investment in infrastructure provided a positive environment for growth. And because the country was “built on new elements with no legacy infrastructure to get out of,” it was poised for a planned energy transition.
“The global economy and India’s size ensure that there is ample capital available,” Gopinathan said. “So if you combine demographics, demand side and capital availability, I think it’s going to be upside. Of course, it has to be done carefully, but it’s there to make it happen.”
Despite the growth of renewable energy and future commitments to reach net zero emissions by 2070, India has benefited from buying Russian oil at heavily discounted rates, and has been a major contributor to Europe’s faces sharp price increases, market volatility and fear of shortages.
Inflation in India was also less severe than in many other countries, with CPI in December at 5.7%.
When asked by CNBC’s Steve Sedgwick, State Bank of India chairman Dinesh Kumar Kalla said it was “absolutely” true that India is in a better position than its rivals.
He pointed to a focus on deploying a national vaccine, measures to curb rising consumer prices and building infrastructure to help ensure food security. That said, he acknowledged that inflation remains a “threat” and that any drag on global economic growth will affect countries as well.
Mahindra Group CEO Anish Shah told CNBC: recession India will not be left behind. “
But he also said, “What we feel is that the impact on India is much smaller due to the country’s inherent fundamentals right now and the fact that inflation in India hasn’t really spiked.” It’s going to be. It’s well controlled.”
not all rosy
2021 Deloitte Report Said India needs to do more to build its infrastructure and reform its system to improve ease of doing business and attract more foreign investment.
Some analysts also quarrel The Sensex stock market index rose 5% last year while the US S&P 500, Europe’s Stoxx 600, China’s SZSE Composite and Hong Kong’s Hang Seng Index fell. It affects volatility elsewhere and can slow down when external factors change.
Meanwhile, the country still has the highest level of income inequality in the world. aggravated During a pandemic, and poverty persists — but by measuring poverty rates fell from 55.1% to 16.4% over the last 15 years.
Suyash Rai, a fellow and deputy director of the Carnegie India Research Center, was skeptical of much of the bullishness at the Davos meeting.
he pointed out Recent GDP growth is 6.3% annualized in the third quarter of 2022 and 13.5% in the second quarter, not significantly higher than the same period three years ago, especially when excluding government-controlled sectors. There was not. Current growth is also distorted by his 6.6% pandemic-related contraction in 2020-2021.
He also points out that comparisons between developed and developing countries can be misleading, with the former naturally experiencing slower growth.
Rai told CNBC in an email.
Regarding the claim of political stability, he replied, “One-party rule should not be equated with political stability.”
Modi has been Prime Minister since 2014.
Rai said India’s period of coalition government from 1989 to then had produced “impressive economic results”, saying that while economic growth had slowed in the years before the pandemic, it was possible to keep one unit at a constant price. Per capita income has tripled in 25 years, he continued.
“Thus, the stability that comes with the ruling party is neither necessary nor sufficient for India’s rapid growth,” he said.
