View: Ignore India at your own peril

There is near unanimity that the latent energy of the world’s youngest and largest population in the world’s largest democracy, India, is manifesting its full potential with explosive growth in infrastructure, digitisation, and human resources.

2024 began on a good note:

● A giant leap in GDP, with three consecutive quarters clocking over 8% growth.
● New records set in all sectors of industry.
● Sensex at an all-time high.
● Highest auto sales.
● Highest e-way bills.
● Lowest bank NPA in a decade.
● Manufacturing PMI at 16-year high.
● Core inflation at lowest in 12 years.
● Service PMI at 13-year high.
● Highest power consumption.
● Highest UPI transactions at 18.4 bn.
● India’s gross GST collection soared to a new peak of Rs 2.10 lakh crore in April, marking a 12.4% increase from the previous year.

This surge was driven by a 13.4% growth in domestic transactions and 8.3% in imports. This record GST collection is not just a fiscal achievement; it symbolises the health and robustness of the economy. It also indicates effective enforcement and compliance strategies by tax authorities and high-tech tax administration.

India’s economy, which stood at $4.112 tn as of March, is ranked 5th in the world, racing to become third by the end of the decade. It is the fastest-growing large economy, with a growth rate of 7.5%, according to the World Bank and 7.6%, according to RBI.

It has a record forex reserve of $648 bn as of March 5 and received an FDI inflow of $79 bn during FY 2022-23. India’s market capitalisation touched a record of $4.5 tn in January 2024. As of December 2023, India’s overall market capitalisation gained 8.82%, the highest growth among the top 10 stock markets.

As the ongoing polls show, in contrast to many of the neighbouring countries, all transformative changes are taking place through democratic means.

Various reports from IMF, World Bank, and reputed global agencies like Goldman Sachs and Bloomberg point to the same fact: today, it is India’s moment.

In April, Bloomberg wrote: ‘China is slowing, and Western governments increasingly see it as a rival rather than an economic partner….(India) is vying to take its place as the world’s next growth driver……India’s stock market is booming, foreign investment is flooding in, and governments are lining up to sign new trade deals with the youthful market of 1.4 billion people. Aircraft makers like Boeing Inc. are taking record orders, Apple Inc. is scaling up iPhone production, and suppliers that have long clustered around manufacturing corridors of southern China are following…..According to a Bloomberg Economics analysis, India could become the world’s no.1 contributor to GDP growth as early as 2028….’

A similar analysis is presented in the other analytical reports of Goldman Sachs (https://rb.gy/xcxkb2), US Department of State: 2023 Investment Climate Statements: India: (https://rb.gy/n3exx1), the Australian government’s An India Economic Strategy to 2035 (https://rb.gy/i1mige),

Most of the global financial sponsors, such as Sovereign Wealth Funds (SWF) and pension funds, now realise that you can only ignore India today at your own peril.

Most of these major funds now are in India, like GIC of Singapore, Temasek of Singapore, Mubadala, Abu Dhabi Investment Authority, Ontario Teachers’ Pension Plan Board, CPP Investments, Pension Fund Global, Norway, the world’s largest sovereign fund, raised India bets to $22 b in CY23, etc.

No wonder Korea Investment Corporation, the world’s 15th largest SWF with $187 bn, has opened its office in Mumbai, its first in an emerging market, to explore investment opportunities in India and not miss the bus.

They all realise that India is not only a large and futuristic market for both large domestic consumption and world market, but the returns are hugely lucrative, as evident from experience. What is more, the ecosystem is fully supportive.

True, today, you can only ignore India at your peril.

The writer is former executive director, India, Sri Lanka, Bangladesh & Bhutan, World Bank


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