A country who attracted manufacturers for its low wages and technological innovations is set to becoming one of the fastest growing economies in the world. Recent reforms and geopolitical transformations, along with a young population, led to India’s economy surpassing the United Kingdom to become the 5th largest economy in the world.
India’s infrastructure to improve operational efficiency to support economic development is targeted to foster growth as India’s minister Ashwini Vaishnaw, who leads railways, communications, and information technology, believes that “If you solve the infrastructure issues at this point of time, then the country can grow at this pace for many more years.” Achievements have been made as the country has seen national highway kilometers grow by 45%, increased electricity plant capacity by 66%, and airports double.
With emerging markets catching the interests of investors, India has shown promise as country leaders target reforms to support the business environment. New bankruptcy laws, goods and services taxes, and digitization have been an area of concern. New trade deals, partnering United Arab Emirates and Australia, despite a rise in tariffs.
Setbacks are limiting the potential that the economy has to grow even more stronger than its current rate. Like many others, India’s population suffered from Covid-19 drawbacks as education was effected. Though demographics show a large population with many young individuals, India’s young adults are finding difficulties in the job market. One of the largest Indian conglomerates facing fraud accusations created noise in media outlets as the Adani Group, who holds close relations to politicians, creates concern among investors. India’s own Prime Minister Narenda Modi has also faced allegations from critics of financial misconducts, and human rights concerning the treatment of Muslims under his administration.
A GDP set to reach $7 trillion by 2031 and expected to have the third largest stock market within the decade is said to grow at an annual growth of 11%, according to Morgan Stanley. According to Morgan Stanley’s Chief Asia Economist, Chetan Ahya believes that “India will be one of only three economies in the world that can generate more than $400 billion annual economic output growth from 2023 onward, and this will rise to more than $500 billion after 2028.”
The setbacks that have limited the growth of the Indian economy should be expected to be a short lived obstacle as many investors and manufacturers are beginning to see the opportunities in its growing economy. With government officials aware of the its country’s potential and making strides for reform to support this growing interest, India’s position in the world is set to change. Though China continues to surpass India in GDP value, the crackdown of Chinese companies by the government along with rocky relations with the United States due to the emergence of spy balloon, may lead to India becoming a more attractive investment in the long run.
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