THE SECOND PART: India’s Role in Changing The Global World Order
World is witnessing rise of developing economies in the economic sphere. Recent human development report with title ‘rise of the south’ has pointed towards this fact that combined wealth of countries from developing world had crossed that of developed world. Like it was agriculture in feudal times or industry at times of renaissance, it’s the service sector which is the currency of today. Developing countries have tapped this sector efficiently with their high demographic dividend and thrust to education. Globalization of trade had acted as game changer in all this with a robust dispute redress mechanism of WTO which has upheld rights of poor nations against rich countries and so helping them in achieving their capabilities. Indian role in this sphere can be gauged from the very fact that India is deemed as growth engine of this world. High demographic dividend along with independent judiciary and stability is all that needed for promoting growth. Economic stability of India at the time of 2008 global financial crisis makes the world confident about Indian capabilities.
“In a slowing global economy, India is ready to seize the baton and become a key contributor to global growth. In the next decade, India is likely to contribute almost as much as China and more than twice as much as the US in terms of absolute economic growth. Moreover, India’s economic development model is frugal in its use of natural resources, carbon, and capital”, writes Jayant Sinha.
On a purchasing power parity basis (2017), the world’s three largest economies are China ($23.2 trillion), the US ($19.4 trillion), and India ($9.5 trillion). If, for the next decade, the Chinese economy grows at an average annual growth rate of 5%, it will contribute an additional $14.5 trillion to global GDP. If the Indian economy grows at average annual growth rate of 8%, then it will contribute $11.0 trillion; and at an average annual growth rate of 2.5%, the US economy will add only about $5.4 trillion to the global economy.
India’s capital productivity is also much higher than that of the other major economies. India has among the highest real interest rates in the world today so that savers have an incentive to put their money into savings accounts. While some Indian business groups are over-leveraged, Indian companies are generally conservative in their borrowings. Government and financial sector debt is also lower than that of most major emerging market countries. India’s debt to GDP ratio (as per McKinsey) is only 135%; it is 282% for China; 160% for Brazil; 154% for South Africa; and 88% for Russia. It is 269% for the US.
However, when reviewing India’s challenges in the changing international scenario, it is not difficult to identify India’s domestic issues of poverty, education, health, access to water, climate change, and environmental degradation and related issues, as enduring challenges that the country has to overcome. The primary goal of all policy, whether domestic or external, is the transformation of India into a developed and prosperous society. Meeting external challenges is ultimately dependent on how successfully India deals with domestic challenges.
Having said that, we are already one of the world’s leading producers of IT services, generic pharmaceuticals, small cars, and motorcycles. We will soon become a manufacturing hub for electronics and defense equipment & likely spur growth and development for other countries in the developing world. Such economic growth is consumption-driven and demand-led. Just like the United States is the entrepreneurial engine for the most affluent 1 billion on the planet, India now has the opportunity to become the entrepreneurial engine for the next 6 billion people on the planet. This is the Next-World and we can be the leaders in serving this Next-World.
“In a slowing global economy, India is ready to seize the baton and become a key contributor to global growth. In the next decade, India is likely to contribute almost as much as China and more than twice as much as the US in terms of absolute economic growth. Moreover, India’s economic development model is frugal in its use of natural resources, carbon, and capital”, writes Jayant Sinha.
On a purchasing power parity basis (2017), the world’s three largest economies are China ($23.2 trillion), the US ($19.4 trillion), and India ($9.5 trillion). If, for the next decade, the Chinese economy grows at an average annual growth rate of 5%, it will contribute an additional $14.5 trillion to global GDP. If the Indian economy grows at average annual growth rate of 8%, then it will contribute $11.0 trillion; and at an average annual growth rate of 2.5%, the US economy will add only about $5.4 trillion to the global economy.
India’s capital productivity is also much higher than that of the other major economies. India has among the highest real interest rates in the world today so that savers have an incentive to put their money into savings accounts. While some Indian business groups are over-leveraged, Indian companies are generally conservative in their borrowings. Government and financial sector debt is also lower than that of most major emerging market countries. India’s debt to GDP ratio (as per McKinsey) is only 135%; it is 282% for China; 160% for Brazil; 154% for South Africa; and 88% for Russia. It is 269% for the US.
However, when reviewing India’s challenges in the changing international scenario, it is not difficult to identify India’s domestic issues of poverty, education, health, access to water, climate change, and environmental degradation and related issues, as enduring challenges that the country has to overcome. The primary goal of all policy, whether domestic or external, is the transformation of India into a developed and prosperous society. Meeting external challenges is ultimately dependent on how successfully India deals with domestic challenges.
Having said that, we are already one of the world’s leading producers of IT services, generic pharmaceuticals, small cars, and motorcycles. We will soon become a manufacturing hub for electronics and defense equipment & likely spur growth and development for other countries in the developing world. Such economic growth is consumption-driven and demand-led. Just like the United States is the entrepreneurial engine for the most affluent 1 billion on the planet, India now has the opportunity to become the entrepreneurial engine for the next 6 billion people on the planet. This is the Next-World and we can be the leaders in serving this Next-World.