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India is a real bright spot in the midst of a global recession: Top executives


India's growth is benefiting from a stable political environment: Tata . Consulting Services CEO

With the 2023 World Economic Forum in Davos, it is mainly discussions about economic growth or the lack of growth in most developed countries, a country often seen as the bright spot.

Bank of Japan Governor Haruhiko Kuroda said in a closing session at the event, highlighting the pressing challenges facing neighboring Sri Lanka, Bangladesh and Pakistan.

The hype around the country is partly due to the staging, with a large presence of Indian executives, officials and investment seekers at the Swiss mountain resort (although the Prime Minister Narendra Modi did not attend).

However, India still shines among the world’s largest economies, with Europe hovering on the brink of a potential recession and US growth slowing.

And while the International Monetary Fund look China will once again outpace global growth in 2023 as it reopens, forecast GDP growth of 4.4% was much lower than the estimate for India, which was 6.1%. Center for Economic and Business Research think India could overtake Germany and Japan to become the world’s third largest economy in the next decade, reaching $10 trillion by 2035.

Several non-Indian executives at the WEF summit, including Nokia CEO Pekka Lundmark, highlighted India as one of the fastest growing markets. their.

Head of Ericsson, Börje Ekholm, said 5G infrastructure is developing rapidly there.

“It’s for the whole of digital India and creating a digital society in India,” Ekholm told CNBC. “They’re on a strong track with 4G but now they’re building 5G at even faster speeds.”

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He continued, India “will soon have the best digital infrastructure outside of China”, driven by telecom companies. Bharti Airtel and Jio, he added.

“They’re building fast, that’s going to help India digitize and if you compare that to what’s happening in Europe we’re behind.”

India also has the ambition to become a global chip manufacturing center, as concerns grow about Western dependence on Taiwan; and according to India’s commerce minister, Apple want to move 25% of iPhone production is for the country (although this has not been confirmed by Apple). It was a world leader in digital payments; and is looking to grow in areas including solar, wind and green hydrogen production.

strong wind

“We are very bullish and very positive about India,” Rajesh Gopinathan, managing director of Tata Consulting Services, told CNBC.

He said the combination of a stable political environment and substantial government investments in infrastructure is providing a positive environment for growth; and that the country is ready for the planned energy transition as it is “building into a new element without legacy infrastructure.”

“The global economy and the size of India have ensured sufficient capital,” Gopinathan said. “So you combine the demographics, the demand and the available capital, I think the upside is significant. Of course it needs to be done with care, but it’s there to be real. chemical.”

Despite future commitments to renewable energy growth and net zero emissions by 2070, India has benefited from highly discounted Russian oil purchases, while Europe has to facing significantly higher prices, volatile markets and shortage fears.

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Not all pink

Deloitte Report 2021 speak India still needs to go further to build infrastructure and reform the system to improve a favorable business environment and attract more foreign investment.

Some analysts also argumentative recent surge in capital inflows — with the Sensex stock market index up 5% year over year while the US S&P 500, Europe’s Stoxx 600, China’s SZSE Composite and China’s Hang Seng Index Hong Kong’s decline — largely a result of relative stability relative to volatility elsewhere, and may slow as external factors change.

Analyst discusses India's push to become a global chip manufacturing hub

Meanwhile, the country still has one of the highest levels of income inequality in the world, worse in times of pandemic, and poverty continues – although by one measure, the poverty rate fall from 55.1% to 16.4% over the past 15 years.

Suyash Rai, a fellow and associate director at Carnegie India research center, is skeptical about much of the upside from Davos.

He shown that recent GDP growth figures of 6.3% year-on-year in Q3 2022 and 13.5% in Q2 are not much higher than the same period three years ago, especially when excluding Government-led industries. government control; and current growth rates are skewed by a pandemic-related 6.6% contraction in 2020-2021.

He also noted that comparisons between developed and developing countries can be misleading, with developed countries naturally experiencing more moderate growth.

“While it is true that Coalition Government capital spending on infrastructure development has increased, it is not clear whether total public sector capital expenditure has increased,” Rai told CNBC via email.

And to statements about political stability, he replied: “We should not equate one-party dominance with political stability.”

Mr. Modi has been prime minister since 2014.

India’s political era of union from 1989 until then has produced “impressive economic results”, Rai said, with per capita income at fixed prices doubling. three times in 25 years, while economic growth slowed in the years before the pandemic.

“So the kind of stability that comes with a dominant party is neither necessary nor sufficient for rapid growth in India,” he said.

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