By invitation : Thanks to Modi Govt, India is laying claim to economic superpower status (written by M Chuba Ao)

Not all battles in economic governance can be understood easily. Indian opposition parties may not understand the hurdles faced by Modi Govt during Covid19. They forget the recession faced globally during the Corona period and the adverse fallout. The Truth is the Economy cannot grow out of nothing. Unlike what happened in six decades under Congress, reform has been carried out by PM Narendra Modi in multiple sectors, says 

M Chuba Ao,

BJP National Vice President. Views expressed are personal

M Chuba Ao with Nagaland Guv La Ganesan

This year marked the first in-person BRICS Summit after three years of virtual meetings. In his address to the Summit, Prime Minister Narendra Modi said,

“Despite the turmoil in the global economy, India is today the fastest growing major economy in the world….Soon India will become a $5 trillion economy. There is no doubt that India will be the growth engine of the world in the years to come.”

Well, one can easily argue that under Shri Modi ji, India has converted times of hardship into opportunities for economic recovery, and its reforms have led to an increase in the ease of doing business. India was ranked 10th in the global economy ladder in 2014. Now India is the fifth.

PM Narendra Modi’s market reforms, which have included cutting corporation tax from 35% to 25% and opening up India to more foreign investment, have freed up entrepreneurs and fired their ambitions and imagination. The SBI’s Economic Research Department predicted earlier this year that India would surpass Germany in 2027 and most likely Japan by 2028-29 at the current rate of growth and become the world’s 3rd largest economy.

Germany’s exit from the top five position will be historic as for the first time in three centuries, there will be no European country in that illustrious group. And when India attains third position, it will be also the Asian era as China will be up there besides the United States.

The Economy does not grow out of nothing. India has done its part under NDA. Reform has been carried out in multiple sectors. Our friends in the Opposition and especially the Congress party have called ‘the inevitability’ of India’s growth graph. They say the growth momentum is natural. 

There is immense contradiction in what the Congress says. They attack the government on various issues including job scenarios and economic management. They forget the recession faced globally during Covid19 and the adverse fallout left by its impact.

Yet, the fact of the matter is that the last few years India has maintained the growth and resilience despite Covid and general global crisis. The decisive political leadership under Shri Modi ji and also people’s mandate vis-a-vis political stability have helped achieve these. Thanks to India’s large population, fast-growing middle class, growing digital infrastructure and energy transition.

Even the S&P Global and Morgan Stanley prediction had stated that India’s economy would become the world’s third-largest by 2030.

But we need to take a closer look at certain important issues. India has to ensure adequate foreign investment and ‘favor’ of foreign manufacturers in order to become the factory of the world. But there are certain matters related to trade protectionism. It is also argued that often India imposes restrictions on the imports of personal computers and tablets. Of course security reasons and the need to boost domestic manufacturing work in pushing these policies. Hence, there are needs for more economic reforms.

Here I need to touch upon a few key factors. A good manufacturing firm needs enough work force, that is labour, needs power, needs transport facilities and also ‘economy of scales’. But since 1991 despite economic liberalisation, many factors have dampened the country’s development and manufacturing journey.

Land remains a complicated subject and if a company including giant players domestically and international companies cannot acquire land easily, how do we presume they will come and invest in our lands. This is all the more important even in north east India — where land belongs to people and without use of the land for industries, the people have remained poor. This is sad.

Labour reforms ought to be carried out and power cuts are our usual norms in north east India or even in various other parts of India. Even post 1991, companies operating in India have been incurring about 15 percent more/additional expenditures than their counterparts globally. The bureaucratic hassles and red-tapism were other negative catalysts. The fact of the matter is the Congress party and their associates were so much involved in preserving status quo that no reforms or policy changes took place on these market factors. Now under Modi; these vital issues are being attended to.

Our firms are gradually becoming competitive. But we must note that these changes will not work overnight. Hence the role of the central government is crucial. The role that the centre under Modi will play even bigger role for next 5-10 years is therefore very crucial. In this backdrop, let us talk about the PLI scheme.

This Production Linked Incentive Scheme (PLI) scheme has been a major contributor in the success of mobile manufacturing. In IT hardware PLI, ý and Flextronics are major players today. In pharma sector PLI has Centrient, Cadila, CIPLA, Glenmark, Lupin as its major beneficiaries. The purpose of the PLI Schemes is to attract investments in key sectors and cutting-edge technology; ensure efficiency and bring economies of size and scale in the manufacturing sector and make Indian companies and manufacturers globally competitive.

The government says, keeping in view India’s vision of becoming ‘Atmanirbhar’, the PLI Schemes for 14 key sectors have been announced with an outlay of Rs. 1.97 lakh crore (over US$26 billion) to enhance India’s Manufacturing capabilities and Exports.

We may also take note that an important positive factor for India is its large and fast-growing middle class, which is helping drive consumer spending.

The rapidly growing Indian domestic consumer market as well as its large industrial sector has made India an increasingly important investment destination for a wide range of multinationals in many sectors, including manufacturing, infrastructure and services.

Also we can take note that by 2030, 1.1 billion Indians will have internet access, more than double from the estimated 500 million internet users in 2020. The rapid growth of e-commerce and the shift to 4G and 5G smartphone technology will boost home-grown unicorns like online e-commerce platform Mensa Brands, logistics start-up Delhivery and the fast-growing online grocer BigBasket.

A key part of India’s continued rise will be its ability to grow its manufacturing sector and challenge China as the world’s No 1 exporter. India has already benefited from a large, well-educated, often English-speaking middle-class, helping the country to develop world-class IT and pharmaceutical sectors.

India has a strong consumer demand, which accounts for about 55% of the economy compared with less than 40% in China, one estimate says.

India’s grand old party, the Congress, either has no idea on how things move. Or they are being economical with truth. Japan has experienced four decades of heavy/robust economic growth, but in terms of global influence — Japan is not among the great influencers! But it goes without saying – India is pursuing the goal of establishing its regional leadership position both in geo-politics and in economy.

India occupied fifth position in world economies in 2022, said the World Bank. The GDP in nominal dollar terms amounted to $3,385 billion as against $25,462bn and $17,963bn for the US and China respectively.

Truly, India’s time has come. India will be a key player in international peace or is already one. India’s membership and leadership position in G-20 and BRICS, the grouping of Brazil, Russia, India, China and South Africa, and its quest for permanent membership of the Secu¬rity Council ought to be understood in that perspective.

One can finally say, India’s growing defence prowess and strategic partnership with the US will help it counter China’s superiority in South Asia and the Indian Ocean region. Moreover, the long-term and rapidly-developing strategic partnership with the US and its allies, partnership with Australia, Japan and the US in the Quad actually has promoted India’s importance also in economic perspective.