While global powers struggle with economic slowdowns, India's strategic reforms, thriving startup ecosystem, and growing middle class continue to fuel its growth

India's economic landscape remains one of remarkable resilience and potential, despite the challenges it faces. Although the recent GDP data for the last quarter of the current year indicates a decline from the anticipated 8% growth to 6.7%, the country continues to lead among the fastest-growing global economies. This achievement is an indicator of India’s gradual economic aggrandizement, positioning it as a global player in economic growth and development.

While major economies around the world experience slowdowns, India’s economic growth has remained robust.

However, one of the key challenges facing the Indian government is the growing need to create more employment opportunities. The number of unemployed and underemployed citizens has increased over the years, and the problem has been exacerbated by rapid globalization. This has introduced a new era marked by the principle of "perform or perish," impacting public sector enterprises and businesses worldwide. India's public sector has not been immune to this trend, but the abundance of cheap labor and a proactive push towards Foreign Direct Investment (FDI) have given the country a promising future.

Despite India's initially cautious approach to economic reforms, the government has gradually implemented a range of confidence-building measures. These initiatives not only promote economic growth but also aim to ensure the equitable development of various societal sectors. The framework of socio-economic justice that India has developed has helped build trust within the country and abroad, as has its progress with export-oriented special economic zones (SEZs). The share of India’s global trade was just 0.7% in the early stages, but efforts to strengthen the country’s medium-term export strategy between 2002 and 2007 have yielded positive results.

Additionally, the economic reforms of 1991 gave India a significant boost, marking the beginning of its economic liberalization. Although some East Asian economies and China receive higher levels of foreign direct investment, India's superior corporate governance and the high quality of its commercially driven companies have allowed it to achieve better returns on investment.

India’s success has also been driven by its business experts and investors, who have made their mark overseas, particularly in fields like information technology, biotechnology, pharmaceuticals, and healthcare. These sectors have become areas in which even advanced economies must catch up. Additionally, India’s indigenous entrepreneurship and industries have provided the country with a significant advantage over other economies that rely heavily on foreign direct investment. A prime example of this is China, where the export-led manufacturing boom is largely fueled by FDI, which is not a substitute for home-grown entrepreneurship. India, on the other hand, has focused on building strong internal markets.

The complexities of financial dealings are another challenge that India has handled well. For instance, Japan has faced severe economic issues due to a malfunctioning financial system in recent years, highlighting the importance of constant monitoring by competent authorities. India’s mature financial markets and the robust regulations governing them have provided investors with confidence and stability. Additionally, while China may lead in savings rates, infrastructure, and manufacturing, India’s services-driven growth and institutional stability, rooted in democracy and pluralism, set it apart.

A particularly promising development in India’s economic landscape is the recent rise of startups. In the last five years, the country has seen more than 10,000 startups emerge, creating over 100,000 jobs, both directly and indirectly. This success has been attributed to a robust strategy that has expanded operational and support networks from rural to urban areas. The National Association of Software and Service Companies (NASSCOM) reported that these startups have significantly contributed to employment generation, further solidifying India's economic prospects.

Foreign investors have also recognized India’s potential. Over the past two decades, more than $60 billion has been invested in Indian stock markets. Additionally, over 600 investors have been granted permission to trade on Indian stock exchanges. This influx of investment has resulted in a 125% growth in the Sensex and a 148% rise in the Bombay Stock Exchange.

India's remarkable progress in the IT industry has opened new doors for Indian companies, which are now aggressively expanding into overseas markets. The country’s compliance and regulatory authorities have ensured that foreign investments are secure and that economic transactions are monitored thoroughly. Despite the challenges posed by a tough global economic climate, India’s G20 Presidency has provided an opportunity to position itself as a key player in global manufacturing and as a reliable partner in various sectors. The cooperation among G20 nations has also fostered the development of new strategies to meet the needs of vulnerable countries, fostering a more inclusive global society. This cooperation could lead to a positive shift in international relations, promoting greater harmony and collaboration.

India’s impressive progress is largely attributed to its immense talent and strategic foresight. However, the country must continue to navigate social and political pressures to maintain its growth momentum. By addressing these challenges, India can further solidify its position as a global economic powerhouse, capable of driving growth not only within its borders but also across the world.

(The author, recipient of Bharat Gaurav award, is a professor and expert on strategic affairs; views expressed are personal)