New India’s journey from fragile five to fastest growing economy of the world.

The new India in its Amrit Kaal is the fastest growing economy among top 5 economies of the world in the first quarter of 2023. It has taken a stride of 5 positions from being 10th in the year 2014 and is projected to reach at 3rd position by the year 2029. It shows India’s amazing growth trajectory in the past 9 years which is directly proportional to the policies and leadership of the Government of India under the leadership of Prime Minister Narendra Modi.
 
Back in 2013, As per a report published in The New York Times a term was coined as ‘Fragile Five’ by an analyst at Morgan Stanley. It identified Turkey, Brazil, India, South Africa and Indonesia as economies which have become too dependent on skittish foreign investment to finance their growth ambitions.

Now in 2023 almost after a decade, the same Morgan Stanley has published an analysis report on India’s economic transformations between the years 2013 to 2022. Their purpose was to analyse the economic transformations during the 9 years of Prime Minister Modi’s government. In which they stated that India’s economic recovery has gained significant momentum, positioning the country as a key contributor to global GDP growth and also assertively added that “India will contribute 16% to Global GDP growth over 2023-24”. Apart from it, the report also stated that, “In a short span of 10 years, India has gained positions in the world order with significant positive consequences for the macro and market outlook and it will emerge as a key driver for Asia and global growth.”

In their report they highlighted 10 major changes in India during the previous decade ranging from supply side reforms, formalisation of the economy, digitalising social transfers, flexible inflation targeting, focus on FDI to insolvency and bankruptcy code, India’s 401(k) moment, government support for corporate profits, MNC sentiments at multi year high and Real estate regulation act. This isn’t just an analysis report but a specimen of new India’s economic growth on fundamental pillars. It narrates the transitional change that transformed the economic scenario of India in the past 9 years.

Five key highlights cited from the report are:-

• Only 15% corporate tax for the manufacturing companies commencing operations before March 2024 which is lowest among its peer countries.
   
• Comparing India’s infrastructural development between 2006-2014 and 2015-2022: 11x increase in the national highway network, 27x increase in renewable energy capacity, 121x increase in broadband subscriber base, 62x increase in railway route electrification.
   
• 76.1% digital transactions as a percentage of GDP in FY 2022-23 as compared to just 4.4% in FY 2016.
   
• Coming down from a peak in 2017-18, the impaired loan ratio reached a 12 year low due to insolvency and bankruptcy code.
   

• 12% decrease in corporate debt as a percentage of GDP in 2023 as compared to 2015.

Back in 2013, India slipped one position from 15th to 16th in the foreign direct investments inflow which rose to 7th position in the year 2022. With 57x increase in the FDI inflow from 45.15 billion USD in 2014 to 71 billion USD in 2022-23 India is emerging as the first choice for the investment for the foreign companies. India received the highest ever FDI inflow of 84.8 billion USD in FY 22 which shows how confident the world is to invest in India’s increasing growth trajectory today.

Back in 2014, India’s exports were 312.35 billion USD which has increased to 770 billion USD witnessing a 146% increase in the past 9 years which is the highest ever in the history of independent India. Recently, India has outlined its foreign trade policy aiming at 2 trillion USD exports by 2030 which describes the vision of the Indian government as well as their confidence in the potential of Indian manufacturing industries through government’s policies.

During these 9 years, India reduced 39000+ business compliances to ensure ease of doing business based on which India jumped from 142nd position in 2014 to 63rd in 2014. According to a report by EIU, out of 17 countries surveyed, India stands at 10th position in terms of business environment for the period of 2023-27 which is four positions ahead since the last report for 2018-22. Today, the new India is the manufacturing hub for the world and Indian companies. Now, India ranks 3rd in the startup ecosystem globally with over 100 startups becoming unicorns. Interestingly, India is the second largest mobile phone manufacturer in the world and along with that it has achieved many other milestones in the manufacturing sector which shows the success of the ‘Make in India’ initiative taken in the past 9 years.

Recently, 18 countries across the world agreed to trade in Indian National Rupee instead of US dollar including countries like Germany, UK, Singapore, Kenya, Sri Lanka and others. It will reduce India’s trade deficit and also reduce the exchange rate risks for the traders in the international market. It reflects the strong position of India’s economy among the top world countries which was nowhere assumed a decade ago.

Now, when India enters its Amrit Kaal, it sets a target to achieve a 47 trillion USD economy in 2047 when it completes its 100 years of independence. It is possible today because India tremendously transformed its economic development approach in the past 9 years. In this Amrit Kaal, the Indian economy is so strong due to its unique governance of which no one would have ever imagined a decade ago. I believe,what changed, is the leadership approach in the past 9 years.