The success of the Make in India drive,the country’s unparalleled economic growthand renewed world interest make this Republic Day even more special, says NB Rao.
The Republic Day celebrations on January 26, 2016, seem to be more exciting than the previous years. The world is recognising the Make in India drive and there’s a buzz among global and domestic investors about the enormous potential that India has on offer in sectors including infrastructure, transportation, manufacturing, defence and services
The National Democratic Alliance (NDA) government headed by Prime Minister Narendra Modi has unveiled a series of initiatives and proposals that promise to transform the Indian economy over the next few years. The next generation of reforms – which includes the introduction of the landmark Goods and Services Tax (GST) Act – also promises to boost economic growth in the country.
The government has also been proactive in meeting these expectations. Prime Minister Modi’s flagship Make in India initiative has taken off in a big way. This was evident in December, during his visit to Russia, when the two countries signed 16 agreements across various sectors relating to the manufacture of nuclear reactors, solar energy plants, railways and defence equipment.
Russia became the first country to take up the Make in India initiative by offering to manufacture products in the nuclear and defence sectors. The agreement between the two countries will cover the construction of a dozen atomic plants in India.
“The Inter-Governmental Agreement on the manufacture of Kamov-226 helicopters in India is the first project.
There’s a buzz among global and domestic investors about India’s potential
Kaushik Basu, chief economist, World Bank, addressing economists recently noted that India is expected to be the fastest-growing country among major economies in 2015 and 2016. “The US and India are two engines of growth, with India anticipated to be among the fastest growing major economies in the world, he said.
World Bank reports say that among the BRICS nations, only China and India are growing around, and below, seven per cent, while Brazil’s GDP is declining by about 3.5 per cent, and South Africa is barely growing.
Finance Minister Arun Jaitley is confident that India’s GDP will expand at 7.3 per cent in the current fiscal
For a major defence platform under the Make-in-India mission,” remarked Modi after bilateral talks with Russian President Vladimir Putin.
According to the Indian Prime Minister, the pace of cooperation between the two countries in nuclear energy is also increasing. “We are making progress on our plans for 12 Russian nuclear reactors at two sites,” he said. “The agreement will increase Indian manufacturing content in these reactors. It supports my mission of Make in India.”
A few weeks earlier, the Prime Minister had signed a deal with the visiting Japanese Prime Minister Shinzo Abe relating to the development of the ambitious, `1 trillion bullet train project to link Mumbai and Ahmedabad. The Japanese government will be funding the project at extremely low interest rates Expectations from India are huge and international investors, analysts and economists are hoping that the country will be able to push ahead with these changes to realise its full potential. Referring to these expectations, Japanese financial major Nomura noted in a recent research report: “In our view,
India is already in the initial stages of a business cycle recovery suggesting that growth would pick up in the next two quarters. The tailwinds from the low commodity prices, low inflation, the gradual transmission of 125 bps of cumulative rate cuts into lower bank lending rates, de-bottlenecking of stalled project clearances and government efforts to kick start public investment in infrastructure should all help to keep the recovery on track,” it said.
Finance Minister Arun Jaitley is confident that India’s GDP will expand at 7.3 per cent in the current fiscal. “I think the second quarter figures give us a sense of satisfaction,” he said. “We expect growth this year to be better than last year and even better the next year. And when manufacturing starts turning despite globally adverse circumstances, I think that’s a very significant figure from our point of view.”
India has emerged as the world’s fastest-growing large economy, even overtaking China. While India will grow at around 7.5 per cent, China’s GDP is expected to slow down to 6.6 per cent to 6.8 per cent next fiscal from seven per cent this financial year. Other major economic powers are also witnessing tepid growth. The US, which is one of the few developed economies that is seeing growth, will expand at around two per cent annually. The Euro-area will expand at a measly 1.5 per cent, the UK at 2.5 per cent and the Asean-five at 4.6 per cent. When it comes to other emerging markets, the scenario is gloomy. Mexico will grow at 2.3 per cent, while the Brazilian economy is expected to shrink by three per cent. Similarly, Russia too is expected to see a slowdown of its economy by 3.8 per cent.
Indeed, the World Economic League Table (WELT), 2016, brought out by the Centre for Economics and Business Research, London, estimates that the world’s top three economies in 2030 will be China (with a GDP of $34.34 trillion, the US ($33 trillion) and India ($10.13 trillion).
While India’s international trade with the developed world and the emerging markets are growing, what is of even more significance is the spurt in trade ties with Africa. According to a working paper by the Export Import Bank of India (EXIM Bank), bilateral trade between India and Africa have risen massively over the past decade, from $8.2 billion in 2004 to $75 billion in 2014.
The Indian government recently approved a scheme enabling Exim Bank and other state-run banks to make available concessional finance to Indian companies bidding for strategically import and large construction and infrastructure projects New India Assurance, the largest non-life insurer in the country, has charted out its global expansion plans that include areas like Asia, North America and Africa.
With Indian companies expanding aggressively around the world, financial sector companies are also following their footsteps. State-owned New India Assurance, a general insurer, recently entered Myanmar and is now also looking at Qatar and Uganda. The company is waiting approvals for its operations in Canada. New India also has a presence in Mauritius and Nigeria.
The insurer saw a 10 to 12 per cent growth in Africa, where its focused on segments such as motor and property.