Praising Prime Minister Narendra Modi’s financial policies, World Economic Forum president Borges Brende asserted on Wednesday that India is poised to become a 10 trillion-dollar economy over the next decade.
“So India is also an economy that, of course, relies on other countries and the global situation. But since growth is back, even if it’s lower than trend growth. In the last three decades, trend growth was close to 4 per cent. No, we are a little bit more than 3 per cent. India is doing incredibly well. I have to say that India is the fastest growing of the large economies in the world,” Brende said.
“If India continues with its reforms, I think India in the coming decade can become a $10 trillion economy. And what does that mean? It means that India will be the third largest economy in the world, and it means that more people will get opportunities for jobs and a better livelihood. We should not forget that India has, due to this growth that we have also seen the last years, eradicated more than eradicated poverty at an impressive scale,” he added.
“Four hundred million people have been lifted out of extreme poverty. This has only been seen in China at that pace in the past.”
The 58-year-old from Norway pointed out that the economic reforms and infrastructure development carried out by the Central government led by Prime Minister Narendra Modi has been a crucial catalyst in India’s development.
“The reforms have been important. We’re seeing that infrastructure is changing very fast and in the hundreds of new airports. We are also seeing trains and roads. We are also seeing that the Indian economy is opening up more open to foreign direct investments, more level playing field, of course, also India has benefitted from this. Diversification of value chains. Many countries say they cannot have just 80, 90 percent of products being manufactured in one country,” he said.
“And you also have this so-called friend sharing that India is benefiting from, especially, I think, the largest economy in the world, the US. Also, increasing manufacturing coming from India. Just look at Apple. There’s not a lot of Apple iPhones produced in India just a few years ago. I know there’s like 25 percent of their production,” Brande added.
“And I would also add that we’re seeing stronger growth in services and the digital economy. Then the traditional manufacturing and India is stronger on services and digital. So also the fact that India has quite digitally literate population, especially the young, is working in its interest. And also of course, this digital id was important in this broader context.”
Advising the Indian government to focus on the education sector, Brende also emphasised the need to cut down on bureaucratic red tape in order to ensure seamless economic development.
“I would also make sure that the revenues that will come from a growth of 8 percent are invested in areas where it further increases India’s competitiveness in the future. I already mentioned infrastructure. There is a way to go on the roads and airports and also in the maritime sector in the ports. But for me, maybe the most important thing is education. India is fortunate to have part of its population also able then to handle several languages including English. We will need to see in the years to come that every child in India Uh, has access, uh, to schools where they will learn basic math, read, write,” he said.
“This is an area for investments, and I think this will be coming. I think red tape get rid of red tape and unnecessary bureaucracy. I think also good governance is important. Continue the reforms to also eradicate corruption will be important.”
Talking about the struggling Chinese economy, he said, “It’s true that China in the past used to have growth numbers like India is seeing now even higher. For some years, they were close to 10 per cent growth and they were at eight. We do, though, expect that China will grow close to 5 per cent this year. And being then such a large economy already, the second largest economy in the world, together with the US, they’re almost 40 per cent of the global economy. Five per cent is not bad. So, I think that China is in a situation where they will have to then continue with reforms.”
“They will need to pivot from growth on investment in real estate and also infrastructure, into areas where will increase their competitiveness for production higher up in the value chain. They also will have to implement new technologies like generative AI very fast because their workforce is for the first time shrinking, So some back offices also have to then. Be done by the new technologies. Also, what is the fact is that China is the largest manufacturer in the world and post COVID and during COVID we saw quite a good demand for traditional goods, but now we’re seeing that. The demand is increasing in services and also digital trade,” he added.
“So China will need to pivot more into these areas. And China also has a huge opportunity with a big home market with 1. 4 billion people. And I think they’re also reflecting on how then to increase the demand in their own market, their, their home market. I think that will be important.”
Hoping for a quick end to wars in Gaza and Ukraine, Brende opined that trade can play an important role in ensuring world peace.
“I always believe that trade and also interactions reduces the risks of war. Look at Europe, where all the, the two first world wars started between European countries. Germany, France, UK and also back then the Soviet Union. So, the single market has led to a situation at least where the core European countries now are very deeply allied. So I hope that we can continue to trade and integrate more,” he said.
“That’s not really the case today, though. So, the wars have to end. So hopefully there will be a solution to the situation in Gaza soon. And also there will be an end to the war in Ukraine. But what we’re all worried about is the escalation. We were very close to an escalation between Iran and Israel that could have led to a full-fledged conflict in the Middle East with the impact would have been terrible,” said Borgen.
