Just as China seems to be slowing down, India is expected to achieve 8% growth in GDP by the end of this fiscal year. Many speculate that the newly industrialized nation can sustain this trend for an entire decade. The government has also been implementing a number of policies that they predict will spur foreign investment, one of which involves cutting interest rates, even though the country experienced a consumer inflation of 5.39% last year. Here are a couple articles about the possible developments:
http://www.wsj.com/articles/indias-economy-could-grow-close-to-8-this-fiscal-year-finance-ministry-official-says-1463409378
http://www.afr.com/business/india-could-sustain-8-per-cent-growth-for-a-decade-says-top-diplomat-20160516-gowekj
What are your thoughts on the future of India? Are these predictions too optimistic or not, and what effects could the government's policies have on the nation as a whole?
I know that in recent years India has not enjoyed the private foreign investment it would have liked to, and I believe that it soon will. With foreign markets like Brazil and China becoming increasingly uninviting, I think that low interest rates will be more than enough to lure in potential investment.
ReplyDeleteCutting interest rates during a period where inflation is decently high doesn't seem like a great policy.
ReplyDeleteNevertheless, India really seems to be expanding its economy in recent years. According to the articles below, companies such as expedia and amazon are expanding their business heavily in India. The growth they're experiencing is very similar to China's in the early 2000's.
Here are the links:
http://economictimes.indiatimes.com/industry/services/travel/expedia-sees-india-growth-coming-from-smaller-cities/articleshow/52293665.cms
http://economictimes.indiatimes.com/industry/services/retail/amazon-indias-growth-threatens-to-unsettle-ecommerce-firms-like-flipkart-and-snapdeal/articleshow/52284757.cms
India recently opened up to foreign investments. Incoming flows of capital from the rest of the world would definitely boost India's economy. Government policies such as easing foreign-investment rules will increase foreign capitals and just like Mario pointed out, more and more foreign companies will try to increase their business in India.
ReplyDeleteI agree with what everyone is saying. With such a large population, India has huge potential to increase GDP. China is having a lot of issues right now and investors are not comfortable spending their money in China. With such a large population, corporations can open up in India with the opportunity of cheap labor. Once industry starts taking off, India will become more inviting and continue to develop.
ReplyDeleteThe expanding economy is exciting for India, however that kind of growth is not sustainable over the long run. Especially from cutting interest rates, it could lead to a host of unexpected issues.
ReplyDeleteAs one of the BRICs, with the great land mass and second largest population in the world, India will achieve its growth at extremely fast pace. I think India's growth is likely to derive from its human capital - highly educated labor with very cheap costs. With foreign investments flowing into current economy, India will grow at similar rate that China did a decade ago. The government may impose lower interest rate to bring more foreign investments in, but it will be just a matter of time. I think it is most important for the government to change its infrastructure and welfare systems to support coming economic growth.
ReplyDeleteI think that India is about to experience the "catch-up" effect mentioned by Piketty in the book. New technology is going to start flowing in at a crazy rate now that they opened themselves up to foreign investment. It seems like each new country to "catch-up" in recent memory goes through it more intense than the last, so it's possible India could hit a growth rate we've never seen before.
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