India 2 to 5 Trillion: The Road Ahead

Prime Minister Narendra Modi recently declared that he wanted India to be a $5 trillion economy by 2024. It is an ambitious target and to reach it, India would need critical reforms to turbo-charge its economy. This present opportunities for investors who are positioned to access the domestic markets. In this global risk-off environment, the Indian economy has also demonstrated resilience among emerging markets.

In this event, organised by Bloomberg along with ICICI Bank, Manu argued about Indian government was on the right track in seeking a rise in the investment rate in the country. However, he mentioned, he was concerned about the desire the government seems to have to drive down the real interest rate to achieve this. There are good reasons why real rates are high in India, depressing them artificially could create trouble. The key to investment is not so much the interest rate as businesses’ perception of returns on capital invested. Our analysis shows that returns on capital invested by foreign investors in India are below the average for Asia, well below China, Malaysia, Indonesia and Singapore. One reason for that is the weak policy and business eco-system, which fails to provide critical public goods needed for export-oriented manufacturing to thrive – such as well-calibrated labour laws, a well-functioning judicial system and infrastructure.

External Link : https://go.bloomberg.com/attend/invite/india-2-to-5-trillion-road-ahead-bbg/

10-Jul-2019


Leave a Reply