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South Asia to benefit from Modi bump in economy

world Updated: Oct 06, 2014 20:34 IST
Yashwant Raj
Yashwant Raj
Hindustan Times

SAARC leaders who went to Prime Minister Narendra Modi’s swearing-in won’t find their effort go unrewarded. His impact on Indian economy — Modi Dividend — will benefit their countries too.

Their respective economies stand to benefit from a 6% expansion of the South Asian economy in 2015, and 6.4% in 2016 powered by an “increase in activity” in India, according to a World Bank report released Monday.

That’s compared to 5.4% in 2014.

“Economic growth in South Asia is forecast to accelerate to 2016 led by an increase in activity in India, the biggest economy in (the) region,” said the bank. India is set to grow by 6.4% in 2015-16 after 5.4 in the current fiscal

India is already “benefiting from this ‘Modi dividend’,” as the bank put it in a statement, “with economic activity buoyed by expectations from the newly elected government”.

Leaders of all SAARC countries — Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka came to Modi’s swearing-in in a historic first for the region.

But it was not an easy decision for some of them — especially for Pakistan’s Nawaz Sharif who faced massive domestic pressure to decline Modi’s invitation. But he went, and may benefit from the Modi Bump.

India is already beginning to turn around, said the bank. Capital flows are already up. “The fact that this turnaround happened shortly after the country was singled out as one of the emerging economies with the most vulnerable external positions shows a remarkable confidence by investors in the Indian economy.”

The bank was also all praise for the Modi government’s first budget, which was criticized by some for lacking major reforms announcements.

“Eschewing a big-bang approach to reforms, the authorities fo- cused on efficient and effective implementation, including actions to expedite decision making and clearance procedures for large projects.seen by some as lacking in big bang announcements on reforms.”