by Suman Gupta
After World War II a number of developing countries attained independence from their former colonial rulers. One of the common claims made by leaders of independence movements was that colonialism had been responsible for perpetuating low living standards in the colonies. Thus, economic development after independence became an objective of policy not only because of the humanitarian desire to raise living standards but also because political promises had been made, and failure to make progress toward development would, it was feared, be interpreted as a failure of the independence movement. Developing countries in Latin America and elsewhere that had not been, or recently been, colonies took up the analogous belief that economic domination by the industrial countries had thwarted their development, and they, too, joined the quest for rapid growth.
Historically, Western countries have always determined developments and decision-making on the other continents. Europe almost ruled the majority of the world’s surface for over 2 centuries of the colonial era. This way of ruling slightly changed as the US gained more power, especially after the Second World War. However, this is all coming to an end. The main reason for this is economic development, which is clearly visible in Asia, especially over the last decades. Asia’s wealth has been rapidly increasing in the last few years, and China has made great improvements in this area as well. This change in wealth led to pressure on Japan and the US.
Economically speaking, the interference of the US in the Middle East possibly resulted in some crucial consequences. This meddling behaviour led to war, terrorism, and the rise of the immigrant stream to Europe. Consequently, this immigrant stream negatively impacted the entire European economy. Additionally, the economic crisis, Greece, Brexit and the situation in Ukraine are considered to be other factors that had a huge impact on the overall economy in Europe. This clearly shows the highly unstable situation in the Western world, and a country like China can make use of this. Europe and the US are relatively lacking in terms of political and economic power. It is expected that China will make a huge impact because the country counts over a billion of people.
What the world has seen in the first 2 decades of the 21st century is the recovery of Asia to its normal proportions, with more than half of the world’s population and more than half of the world’s products. This starts, of course, with Japan after the Meiji Revolution, and it continues with the smaller countries like Korea, Singapore, and Malaysia. Now it is focused on China, but it is also going to include India. India now has growth rates of 8 to 9 percent a year. We should see during the course of the 21st century Asia as a whole recovering to about what one would think would be normal proportions. That is power transition.
In contrast, India since 2014 offers the exception to an otherwise less buoyant global picture. The Indian economy has actually picked up speed over the last couple of years after dipping in 2012-13. A number of factors have contributed, including its status as a net importer of oil and other commodities (and therefore a beneficiary of lower global prices) and a new government since 2014 that has been starting to introduce more business-friendly policies to stimulate economic development and growth.
India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO) and International Monetary Fund (IMF) and it is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships. India’s GDP increased 7.1 per cent in 2016-17 and is expected to reach a growth rate of 7 per cent by September 2018.
n the Union Budget 2017-18, the Finance Minister, Mr. Arun Jaitley, verified that the major push of the budget proposals is on growth stimulation, providing relief to the middle class, providing affordable housing, curbing black money, digitalization of the economy, enhancing transparency in political funding and simplifying the tax administration in the country. The country is expectant of various other head-strong initiatives from the center for the year 2018-19 as well.
Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors. The Government of India, under the Make in India initiative, is trying to give boost to the contribution made by the manufacturing sector and aims to take it up to 25 per cent of the GDP from the current 17 per cent. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.
India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behavior and expenditure pattern, according to a Boston Consulting Group (BCG) report; and is estimated to surpass USA to become the second largest economy in terms of purchasing power parity (PPP) by the year 2040, according to a report by Price water house Coopers.
In summary, the power is shifting to the East but for east to grab this powert and reap the benefits, many reforms and policies need to change keeping in view that global turbulence can derail the process. In the east the Dragon (China) has saturated its fire power and the Elephant ( India) is on the roll.. For India to catch this train, reforms and investment friendly policies which can eradicate poverty, reduce unemployment to lower single digit figures, eradicate corruption along with a strong central government needs to be the mantra of the day. India would need to develop a strong strategic cushion in its policies so that when global turbulences like war, major natural calamity or economic recession takes place, it should not impact India growth train.