New Delhi (India), October 23 (ANI): “A bright spot in a dark horizon”, “A logistical marvel”, “A leader in digitalisation” … are some words of praise coming out of Washington DC for the Indian economic model.
The international monetary fund recently heaped praise on India for facing unfavourable economic headwinds as the World braces for market-damaging events unfolding at a rapid pace.
A recession looms and is expected to have a global impact; from major developed economies to those just emerging. The annual conference of the International Monetary Fund and the World Bank featured many discussions about the state of the world economy.
With the Russia-Ukraine crisis escalating to almost nuclear threats oil prices spiking the world over and a general slowdown in consumption patterns coupled with global high inflation the mood was grim at this year’s IMF meeting, with fears of a recession looming large.
However, amidst this gloom and doom, the IMF reserved special praise for India.
India’s path to a strong economic model to be emulated by the world has not been an easy one. The painstaking groundwork was implemented on a mission mode to make a large part of the population digitally compliant.
The DBT or Direct Benefit Transfer scheme which transfers government funds directly to beneficiaries without any interference from middlemen, also was a topic of praise by the IMF, calling it a “Logistical Marvel”.
In contrast to this success story of Digital India, we look at the German Finance Minister’s recent comments when asked to conduct a similar exercise in his country… Prominent Twitter users were aghast that Germany had difficulty matching bank accounts with beneficiaries and that a process like India’s DBT could take almost 18 months.
“From India, there is a lot to learn. If I look at the case of India, it is actually quite impressive”, says, Paolo Mauro, Deputy Director of the Fiscal Affairs Department, IMFOne sector, however, that remains a worry for India is the Dollar to the Rupee exchange rate. With the Rupee breaching Rs 82 to a dollar, headlines across the Indian media landscape predict a doomsday scenario for the Indian Rupee.
However, if we dig a little deeper into the data behind the exchange rate fluctuation we see that in 2022, the Rupee depreciation has been a lot lesser than other Asian Currencies, despite an increasing crude oil bill.
Indian Finance Minister Nirmala Sitharaman reiterated this fact on her recent trip to Washington DC.
“The Indian rupee has performed much better than many other emerging market currencies. The efforts of RBI are more towards seeing that there is not too much volatility; it is not to intervene in the market to fix the value of the Rupee. Containing the volatility is the only exercise RBI is involved in and I have said this before that Rupee will find its own level.”, said, Finance Minister.
According to the World Economic Outlook published by the International Monetary Fund, India is projected to surpass Germany to become the fourth-largest economy by Financial Year 2027.It also says that India would expand faster than Japan by Financial Year 2028.
Political stability and the attractiveness of the Indian economy as an investment destination for foreign multinationals can continue to drive structural flows into the country via FDI. This will provide a further impetus to the country’s strong economic foundation.
While the world was still rebuilding from the COVID-19 pandemic and its aftershocks, India took a massive leap on the economic front when it recently surpassed the United Kingdom in terms of nominal GDP.
Observers say that a tripartite foundation consisting of a resolute political will to make difficult decisions for the greater good, swift implementation of fiscal objectives, and a development strategy based on science and technology has yielded rich dividends for the country.
As countries brace for economic headwinds, the Indian growth story continues to march on. As the IMF put “India remains a bright spot in a dark horizon…” (ANI)