Economy

  • October 17, 2016
  • Les Routes Insolites

Emerging as one of the leading nations of Asia, India already has a stronghold on the economy of the region, and in many aspects parallels the progress of nations like China. Although slow growth was prominent for years after the independence, it was the Economic Liberalization of the nation in 1991 that brought a spurt of drastic changes, the fruits of which the nation is still reaping. Though, the figure looks vulgar in comparison to the number of poor people in the country, but India is the only country apart from China and US to possess more number of billionaires than any other country. We have 55 billionaires at present and still increasing.

India is among the few countries in the world whose young population would keep driving its economy to new heights even in the times to come. Unlike other economies including China, India has vast population of people under 25 and it sets up as a boon for the country. As per official data more than 460 million constitute the working population of the country and it is second largest in the world after China.India is the world leader in terms of providing outsourced IT services. Of late India is experiencing some pressure in the sector after the arrival of Philippines in the market, and still we manage to deliver around half of the world’s outsourced IT services. It roughly accounts to be more than $ 45 billion.

India has the seventh largest foreign currency reserves in the world. Indian economics sits proud on reserves of around $ 300 billion. It makes it certain that the Indian economy despite some hiccups recently is all set to grow more and acquire larger capital assets in the years to come. At present our GDP has reduced to 5%, but as per wide expectations we would be clocking 8% growth in coming in 2015-16.

Background

India is a stable democracy. It is 80 percent Hindu but also home to one of the world’s largest Muslim populations. Prime Minister Narendra Modi, leader of the Bharatiya Janata Party, took office in 2014 and is credited with reviving the economy and reinvigorating India’s foreign policy. Corruption, poor infrastructure, and fiscal deficits are a drag on development, but with lower global oil prices, the economy has been sustaining a growth rate of about 7 percent. Modi has opened the defense and insurance sectors to private investment, but his government has failed to secure passage of promised reforms in land acquisition and goods and services taxes. India is a significant force in world trade, but growth remains below potential.

Rule of Law

Political corruption has a negative effect on government efficiency and economic performance. Civil servants at all levels are known to accept bribes or engage in other corrupt behavior, usually with impunity. India’s judiciary is independent, but courts are understaffed and lack the technology necessary to clear an enormous backlog. Uncertainty about land ownership is one of the biggest problems facing the economy.

Current Government

The reform-minded government of Narendra Modi has undertaken some necessary structural adjustments with a focus on improving the inefficient and bloated government sector, better managing public finance, and improving the business and investment environments. Despite some success, however, overall progress on implementing reform measures has been limited and uneven.

India’s long-standing institutional shortcomings continue to undermine the momentum for economic development. In the absence of a well-functioning legal and regulatory framework, corruption remains a serious impediment to the emergence of a more dynamic private sector. The state’s presence in the economy remains extensive through state-owned enterprises.