This could well be the year India finally emerges as a global economic heavyweight says an article in the Wall Street Journal. The cumulative effect of solid economic growth, microeconomic reform, and a changed geopolitical environment has the West more eager than ever to draw India into its orbit.
The bullish outlook on India starts with demographics—this year, it is expected to officially surpass China as the world’s most populous country, and one that is much younger than China and most of the West.
The International Monetary Fund says India’s annual economic growth will average 6.5% this year and next, the fastest among 30 major economies, resuming a two-decade trend of solid growth. Last year, India displaced the U.K. as the world’s fifth-largest economy in current dollar terms and could tie Germany for fourth place by 2025.
In recent years, India has made some impressive strides: numerous new expressways have been built or are under construction, the number of airports has doubled, and the total of rural roads has increased 85%. Electricity plant capacity has risen 66% and blackouts have become much less frequent. A high-capacity electrified railway will carry double-stacked containers on trains up to 1.5 kilometers long from north of New Delhi to Mumbai in half the time of regular lines, while connecting to container ports. A separate eastern freight corridor will extend to Kolkata.
India’s government introduced a new bankruptcy law to speed up the resolution of insolvent companies, and a goods and services tax that has boosted the number of taxpayers and simplified collections. The “India stack,” as the government calls the digitization of public services, has made it possible to carry out countless tasks online, such as tax appeals and Covid vaccine appointments. India has free trade deals—pacts with the United Arab Emirates and Australia are now in force and talks with the U.K. are well advanced.
The Biden administration has concluded that while India might be a flawed democracy, those flaws don’t diminish the appeal of having such a large and influential economic power in its corner as the geopolitical contest with two true autocracies, heats up.