Avoiding risks and focusing on slow growth seems to be working wonderfully for India, which is definitely one of the most promising developing countries when it comes to emerging markets. The reason behind India’s success is the fact that it’s focusing on long-term growth rather than on instant gratification. Moreover, it has taken small steps instead of giant leaps, and this is what has caused its economy to boom. While some people might doubt this method, India’s case tells us it actually works. Today, we’re going to explore the idea of emerging markets success stories by looking at India and its impressive journey.
Emerging Markets Success Stories: India
What Is India Doing Differently?
India has been enjoying some incredible past years, especially when it comes to its emerging market. Even though other countries in Asia are also developing, India has managed to set itself apart from the rest. In order to understand how India came to be known as one of the most impressive emerging markets success stories, it’s imperative to look at what it has been doing differently for the past couple of years.
The first thing that India changed in its approach to economy was to focus on slowly and gradually growing its gross domestic product (GDP). This implies taking small steps and focusing on micro changes rather than macro ones. Given India’s size, this approach proved to be the best and most pragmatic alternative.
The government also played an important role in India’s recent development. It has focused on changing multiple aspects that are relevant for emerging markets, such as the ease with which people can do business, the level of corruption that the country was subjected to, the level of financial inclusion that would provide more people with the same economic opportunities, the infrastructure and the funds dedicated to it, and the general governance that was much better than in the past.
The reason behind all of these governmental actions was the desire to reach sustainable growth. They serve as the foundation for this end goal, because they all aim to help India grow. Even if the growth is not fast, it is secure. There has also been a focus on different reforms that can help with India’s long-term growth. Indian leaders focused on judicious policies that could assist their country in developing in the long run. The growth is gradual, and it’s only visible if you look at India’s economic expansion over a period of a couple of years. Still, this is not what concerns India’s leaders. Their goal is to ultimately witness change, which is definitely currently happening and will probably continue to happen in the future.
Key Figures in India’s Development
As we’ve already mentioned, Indian leaders are very much prone to helping their country with its emerging market and general development. Out of these leaders, one stands out as a main character in India’s success story. His name is Narendra Modi, and he’s been India’s prime minister since 2014. He is pro-technological progress and pro-business, and this is easily noticeable in his platform. Thus, he’s a strong supporter of reforms that focus on raising governmental standards and developing businesses.
According to former governor of the central bank of India, Raghuram Rajan, Prime Minister Mori and his reforms have brought macroeconomic stability to India. The reforms are varied and target multiple sectors, such as business, finances, and agriculture. In terms of agriculture, the reforms are not as successful as those in the business sector. However, they could still potentially bring about more growth, just as educational and labor-related reforms could.
What Are the Consequences of India’s Success?
All emerging markets success stories bring notable changes in a country’s dynamics, and India’s story makes no exception. The first thing that is an immediate result of all the governmental actions and the focus on a slow growth of the GDP is the actual noticeable growth of the gross domestic product. At the beginning of 2016, India’s GDP grew 7.9%. This is an incredible growth if we take into consideration the fact that at the end of 2015, its GDP only grew 7.2%. The expectations were not as high, with experts having in mind a mere 7.5% increase.
Apart from the reforms that helped grow India’s GDP, there were other factors that were of great help as well, and which deserve being mentioned. One of the things we’re referring to here are the Reserve Bank of India’s low interest rates. These were coupled with their struggles to contain inflation, as well as with the energy prices which were quite low.
The second thing worth mentioning is the fact that India’s young population is constantly growing. In countries that are already developed, the population is aging fast and thus shrinking. In developing countries such as India, the population demographics help with the economic development.
What Will the Future Bring?
India is definitely a success story as we’re writing this. The question on everyone’s mind is: will this success last? Some business experts and economists are still unsure whether India’s economy could resist challenges in the long run or not. Other indicators of success apart from the GDP, they believe, lack the vitality the GDP currently enjoys. Moreover, the GDP figures don’t seem to present the whole picture. For instance, there are still people who complain about Modi’s failure to create jobs for the impressive number of people who become part of the workforce every month.
Another complaint comes from the business sector. It relates to the Bharatiya Janata Party’s inability to enact a goods and services tax that is nationwide. This would create a single market out of the 29 Indian states, which would in turn increase the GDP even more.
Still, even if the situation in India is not perfect, there’s no denying that the country has the potential for further development and economic growth, and the opportunity to still be the lead in the top emerging markets success stories.