Jakarta, CNBC Indonesia – In the midst of world economic development, India has emerged as a new competitor to the United States (US) and China. This Bollywood country is expected to become a new economic powerhouse in Asia and even the world, and become the largest debtor in the region.
The Financial Times reports that India is starting to rival China as a creditor of foreign loans to neighboring countries, including recipients of China’s Belt and Road (BRI) funds. Indeed, this country has poured tens of billions of dollars to finance various projects, including helping countries that are experiencing financial difficulties such as Sri Lanka and the Maldives.
In the Maldives, India is funding the $500 million (Rp 7.7 trillion) ‘Male Raya Connectivity Project’. Bollywood has also built a 7 km long bridge which connects the capital with several other islands in the vicinity.
“Prime Minister (PM) Narendra Modi’s government is starting to develop a sense that India needs to do something,” said C Raja Mohan, a senior researcher at the Asian Institute of Public Policy in Delhi, quoted on Friday (2/ 12/2022)
“The geopolitical dispute with China is much livelier,” he added.
Under Modi’s leadership, he expanded the credit, which amounted to almost three times compared to the previous 8 years. Loans through the Development Administration of India increased by a total of US$32.5 billion.
“India’s cumulative development aid since independence in 1947 has nearly doubled, from $55 billion to $107 billion since 2014,” according to the government-backed RIS think tank.
While still below the Chinese scale, India has provided more than 300 credit lines for some 600 projects, ranging from a cement plant in Djibouti to a bridge in the Maldives. India has also funded everything from training courses to the restoration of overseas cultural sites such as mosques and temples.
“India doesn’t have the capacity to expand as far as BRI. But it is doing something, in its scope, where it offers competition to China,” Mohan added.
Japanese overtaking
India is predicted to be the world’s third largest economy in 2030. It will be followed by the United States (US) and China which are ranked first and second. This position certainly surpasses countries with other major economies, such as Japan, Germany and the United Kingdom.
“These drivers will make the economy and the stock market [India] third largest in the world before the end of the decade,” Morgan Stanley analysts led by Ridham Desai and Girish Acchipalia wrote in the report, quoted by CNBC International.
The projections were released by S&P Global and Morgan Stanley. S&P projects gross domestic product (GDP) growth to average 6.3% through 2030, while Morgan Stanley forecasts India’s GDP is expected to more than double by 2031.
This significant economic growth was even seen by the annual report of India’s GDP growth (yoy/yoy) of 6.3% in the third quarter of 2022, this figure was slightly higher than the Reuters poll estimate of 6.2 %.
Morgan Stanley said investments in various fields are driving India’s economic growth.
“India has the conditions for an economic boom driven by the offshoring, investment in manufacturing, energy transition and digital infrastructure of a developed country,” he added.
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