Global leaders converged at Davos, the popular Swiss ski resort, to discuss geo-politics, economics and development at the World Economic Forum’s (WEF’s) flagship annual event, buffeted by concerns over a slowing Chinese economy and a commodity price crash. The world’s second-largest economy grew at 6.9% in 2015, its slowest pace in a quarter of a century, triggering mounting concerns among global investors. The Chinese economy is slowing and its financial market has been on a roller coaster ride, roiling world markets as it tries to find balance.
This has turned the focus on India, which, despite sputtering global conditions, is set to become the world’s fastest-growing major economy by 2016, outpacing its more populous Asian titan. According to latest government estimates, India will likely grow at 7-7.5% in 2015-16, marginally faster than the previous year’s 7.3% growth. A new World Bank report has said emerging market economies that led the global recovery from the 2007-8 financial crisis are slowing down, with one exception, India. It called India-led South Asia a ‘bright spot’ in an otherwise gloomy outlook for emerging markets. According to the World Bank, India is projected to grow at 7.8% in 2016, a view that found echoes in the annotations of its Bretton Woods peer, the International Monetary Fund (IMF). The IMF has projected ‘robust’ growth for India in 2016 and 2017 and a ‘more gradual’ pickup in the global economy than it had said before. According to the IMF’s updated World Economic Outlook, India will grow by 7.5% in both 2016 and 2017.
Finance minister Arun Jaitley, accompanied by RBI governor Raghuram Rajan and other senior government officials at the WEF summit, made a strong pitch about the Indian economy’s healthy fundamentals. Indeed, a real GDP growth rate above 7.5% would be an enviable achievement, given that most of the major economies including Brazil and Russia are struggling to narrow the levels of contraction. Delegates at the summit, who control hundreds of billions of dollars, are keenly following the pace of policy reforms in India. It is irrefutable that the current conditions in the world economy have presented India with an ideal opportunity to capture the position as the world’s primary growth engine. For the better part of the last decade, China had been the toast of discussions in Davos. This year, however, the phraseology at Davos has undergone a subtle metamorphosis towards India. It is in India’s interest to seize the moment and shift the mass of world economic activity towards itself through appropriate policy interventions.