7 reasons India is the key to global economic growth

India is a source of growth for the global economy for the next few decades and it could be what China was for the world economy, the IMF said today, as it suggested the country take steps towards more structural reforms. Here are my 7 reasons India is the key:

  1. India now contributes, in purchasing power parity measures, 15 per cent of the growth in the global economy (IMF figures) – just behind China and USA.
  2. India has three decades before it hits the point where the working age population starts to decline. About 600 million people – half of India’s population – are under the age of 25. The next three decades is India’s window of opportunity in Asia.
  3. The IMF has forecast India’s growth to rise to 7.3 per cent in FY2018/19 and 7.5 per cent in FY2019/20, on strengthening investment and robust private consumption.
  4. The Indian economy is recovering surprisingly well from the two shocks that started from late 2016: demonetisation and then the implementation issues related to the GST. Long term, the GST is the biggest regulatory game changer in India.
  5. Reformed insolvency and bankruptcy codes are another big achievement of the Modi Government.
  6. The Reserve Bank of India is now formally and actively involved in inflation targeting – India has seen the benefits of that have lower inflation and inflation expectations.
  7. In the pipeline of Modi reforms are more changes to improve the business climate and further steps to liberalise Foreign Direct Investment (FDI).And then there are some of the key smaller steps like things to improve the business climate, steps to further liberalised FDI.

Sure, more reform is needed in labour laws, overall improvement in ease of doing business, more infrastructure activity and dealing with the banking and corporate sector balance sheet issues.

But current evidence is that India will avoid the trap of “growing old before it becomes rich”.

Author: Stephen Manallack

Former President, Australia India Business Council, Victoria and Author, You Can Communicate; Riding the Elephant; Soft Skills for a Flat World (published by Tata McGraw-Hill INDIA); Communicating Your Personal Brand. Director, EastWest Academy Pty Ltd and Trainer/Speaker/Mentor in Leadership, Communication and Cross Cultural Communication. Passionate campaigner for closer western relations with India. Stephen Manallack is a specialist on “Doing Business with India” and advisor/trainer on “Cross-Cultural Understanding”. He is a Director of EastWest Academy Pty Ltd which provides strategic advice and counsel regarding business relations with India. A regular speaker in India on leadership and global communication, his most recent speaking tour included a speech to students of the elite Indian university, Amity University, in Noida. He also spoke at a major Federation of Indian Chambers of Commerce and Industry (FICCI) global summit, the PR Consultants Association of India in Delhi, the Symbiosis University in Pune and Cross-Cultural Training for Sundaram Business Services in Chennai. He has visited India on business missions on 10 occasions and led three major trade missions there. He provides cross-cultural training – Asia and the west.

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