IMF Projections: India’s Stellar Growth and Global Impact

by Ganesh Puthur - 8 January, 2024, 12:00 3925 Views 0 Comment

At a time when the global community is facing geopolitical uncertainties, the new International Monetary Fund (IMF) growth projections have indicated that India will lead the economic growth of the world. The IMF raised India’s growth forecast for the current fiscal year from 6.1% to 6.3%, marking it as the fastest-growing major economy. The world economy is projected to grow at a rate of 2.9%. Whether it is the G20 presidency, the bid to host the 2036 summer Olympics or its demand for a permanent seat in the United Nations Security Council, India has been consistently trying for a major role on the world stage. The prevailing geopolitical situation and the rising stature of India clearly indicate that there will be major changes in the global power equations.

Indian Prime Minister Narendra Modi has been constantly pitching the idea of India becoming a developed nation by 2047 while the Niti Ayog in its vision document had set an ambitious target of India becoming a 30 trillion dollar economy by 2047. Considering that the size of the Indian economy at the beginning of 2024, is a little over 4 trillion dollars, the economy will have to grow exponentially to achieve the target. The Indian government has been spending a huge amount of money on infrastructural development – improving the road-rail-air and sea connectivity cumulatively. The GIFT city in Gujarat, Ahmedabad- Mumbai Bullet train, the Delhi-Mumbai expressway, the bharatmala project, massive metro networks in various cities, freight corridors and new ports under sagarmala are a few projects which have the potential to transform India. This has positively impacted the business environment in India.

China is facing a major economic crisis and at the same time many international companies are slowly shifting their supply chains from the Communist state. India becoming a global manufacturing hub is a near possibility in the upcoming decade. Following the COVID-19 pandemic, the world views China with suspicion and this will undoubtedly pull major MNCs to India. For example, Apple currently manufactures 7% of its iPhones in India and plans to expand it to 25% by 2025. Tesla is expected to start its manufacturing unit in Gujarat and a formal announcement is expected during the Vibrant Gujarat summit. The mobile phone export from India stood at Rs 90,000 crore in FY 2023, doubling from the Rs 45,000 crore export it had in FY 2022. In 2022, about 98% of mobile phone shipments in the overall Indian market were locally produced while it was merely 19% in 2014. The government expects to increase electronics manufacturing to USD 300 billion by 2025-26, with USD 120 billion coming from exports. This rather shows the remarkable success of the government’s ‘Make in India’ initiative.

The world currently sees India as a land with unlimited opportunities. India’s 1.4 billion population and the expanding middle class itself provide a major market for the companies. What needs to be noted is that there is now healthy competition between various Indian states when it comes to attracting more foreign investments. Uttar Pradesh, which was once mocked as a BIMARU state, is now aiming to become a one trillion dollar economy by 2027 while Maharashtra is expected to achieve the mark in 2028. From these analyses, it is certain that India’s economy is progressing swiftly.

With the expanding economy, India now commands a respectable position in the global order. The G20 presidency offered India a great opportunity to exhibit India’s leadership capabilities to the world. India’s active engagement in various international platforms like BRICS, QUAD, I2U2 and so on has earned India a certain level of global stature. There are many nations in the world which proactively support India’s demand for a permanent seat in the United Nations Security Council. India’s strategic presence in the Indo-Pacific region has made it a natural alternative to China in the eyes of Western powers who see India as a reliable partner.

The policy of ‘de-hyphenation’ followed by successive governments has allowed India to engage with all the partners irrespective of their relations with each other. For example, India has good relations with Israel. But at the same time, India also deals with Palestine. India’s relationship with Israel is totally unaffected by India’s relationship with Palestine. The same policy applies to Russia and Ukraine. Russia is an old ally and a strategic partner of India, but that doesn’t stop India from engaging with Ukraine. The Israel-Iran axis considers Iran as an antagonistic force. But India considers Iran as an important regional partner and enjoys good relations with all these above mentioned nations. This sort of balancing act has secured India from many geopolitical puzzles in the region.

An economically resurgent India will have a more leadership role in global affairs. As mentioned earlier, China is facing a major economic crisis and their much ambitious One Belt One Road initiative is yet to generate any monetary or strategic advantage. At the same time, the United States is struggling with its mammoth external debt and a major political crisis within the nation. Abandoning Afghanistan, and leaving behind stockpiles of most modern arms and ammunition at the hands of Mujahideens have dented the global image of the US. The war with Ukraine has financially drained Russia and they are hit by heavy sanctions imposed by the Western countries. The geopolitical situation itself demands a serious contender to take the centre stage and the current circumstances favour India.

India’s economic rise has allowed the Modi government to pursue diplomacy aggressively on various issues. Recently, a Qatar court had sentenced the death penalty to 8 ex-Indian Navy officers who were accused of espionage for Israel. Following India’s diplomatic intervention, the Court of Appeal commuted the death penalty. Sri Lanka recently banned the Chinese ‘research vessels’ from operating in its area after India had raised security issues. Cross-border terrorism has been a major concern for India for decades. The recent phenomenon of terrorists in Pakistan being neutralised by ‘unknown men’ should not be seen in isolation.

Prime Minister Narendra Modi has explicitly stated on multiple occasions about India’s ambition to lead the world, to reclaim its ‘Vishwa Guru’ status.  This vision, along with robust economic growth can make India a developed country by 2047. The IMF projection clearly indicates that even when all the major economies are struggling to grow, the Indian economy is expected to grow at a rapid pace. Considering the larger picture, it would not be wrong to call the 21st century ‘India’s century’.

Ganesh Puthur
Author is an IR enthusiast and holds a masters degree in History from University of Hyderabad. He is a recipient of Sahitya Akademi Yuva Puraskar.

1 reply on “IMF Projections: India’s Stellar Growth and Global Impact”

An informative articles. Thank you Ganesh for narrating the global positioning of our country Bharat with facts and figures

Leave a Reply

Your email address will not be published. Required fields are marked *