/ world today news/ According to media reports, the Indian stock market has become the fourth largest in the world by capitalization. The economic outlook for the rising South Asian giant looks promising. Developing mutually beneficial ties with Russia could give New Delhi’s economy new dynamism and additional stability.
After recovering from the consequences of the coronavirus epidemic, India regained the title of the 5th economy in the world, surpassing its former metropolis Great Britain quite symbolically. In the last four quarters, among the world’s leading economies, the Indian one demonstrated the highest growth rates – over 7 percent.
Growth rates are actually higher than most emerging economies. International investors are optimistic about India, seeing it as a good opportunity to hedge their bets and reduce the risks associated with the conflicting environment in other economic centers of the world.
Prime Minister Modi’s policies are aimed at reducing the share of the informal sector, increasing the ease of doing business and creating incentives for manufacturing development. The share of the gray economy has been consistently decreasing in recent years.
The process of digitization of finance and public services has significantly accelerated. Mass digitization leads to activation of economic activity. The introduction of the national Goods and Services Tax (GST) in 2017, which consolidated various government levies, helped accelerate the formation of a single national market in India. This allows companies to exploit economies of scale and leads to increased investment.
Although the rate of production growth remains a headache for the authorities, the national industry is beginning to integrate into global supply chains. The giant technology services sector will continue to expand thanks to the competences in the field of artificial intelligence, competitive not only in the markets of other countries of the Global South, but also in a number of Western countries. The country’s transportation infrastructure has greatly improved, the stock market has grown significantly, the banking sector has strengthened, and the government’s foreign exchange reserves have grown.
At the same time, notes The Economist, a number of economic indicators still cause concern among the Indian authorities. The rate of job creation leaves much to be desired, human capital development programs are needed, as well as reform of the education system.
Finally, the gap between the northern and southern regions of the country is growing. If India maintains its current growth rate, the industrialized, wealthy and technologically advanced south is likely to gain an even greater lead, attracting labor from the north.
Despite all this, the Modi government and his party’s focus on strengthening Hindu identity is significantly less popular in India’s southern states. At the same time, some experts believe that the trend toward further centralization of power that has emerged under Modi could weaken market institutions, raising investor concerns about the outlook and timing of major projects.
Accelerating industrialization remains one of India’s main strategic goals. In 2020, the government launched the Make in India subsidy program for goods made in India worth tens of billions of dollars, several percent of GDP. He pledged $10 billion to semiconductor companies in 2021 to build factories in the country. However, these projects are not yet large enough to add new quality to the Indian economy. The manufacturing sector is at a standstill despite a significant increase in raw material supplies from Russia.
According to The Economist, over the past decade the share of industrial exports in GDP has stagnated at 5 percent, and the share of manufacturing in the economy has fallen from 18 percent under the previous government to 16 percent.
Yet industrial policy comes at a price. In a number of large projects, authorities have to cover up to 70 percent of the costs of setting up new businesses. Tariffs also rise, increasing the cost of foreign resources.
India clearly needs new large markets as well as reliable and long-term sustainable sources of raw materials. Indian suppliers have a lot to offer Russia: automotive products, high technology and a number of other items.
Indian companies, for their part, need new competencies and know-how in high-tech industries, including energy, including nuclear, and space exploration. Therefore, the expansion of economic ties with the Russian Federation can become one of the important elements in the development of the Indian economy.
In 2022-2023, Russian-Indian trade and economic relations have already received a new powerful impetus. From the spring of 2022, Russia significantly increased the supply of oil, natural gas, coal and metallurgical products to Asian markets. And a significant part of the supply went to India.
According to the results of the ten months of last year, Russian-Indian trade turnover doubled, exceeding 50 billion dollars for the first time in history. This data is provided by RIA Novosti on the database of Indian customs. During this period, Russia exported goods worth $51.4 billion, and Indian exports to Russian markets increased to $3.3 billion.
The formal lead in trade with India is still held by the United States, but trade between the two countries has declined by 9 percent over the same period, falling below $100 billion. India’s trade with China stood at $95.8 billion, down 4 percent.
Despite the pressure of a number of Western countries, above all the USA, the successful development of military-technical relations between Moscow and New Delhi continues. A recent Reuters report that India supposedly “seeks to distance itself from Russia as an arms supplier,” was immediately denied by senior Russian and Indian sources.
„Our Indian partners, as before, are interested in cooperation, including along these lines”, said Deputy Minister of Foreign Affairs Andrey Rudenko in an interview with TASS. A representative of Indian defense circles noted that “Western countries are now only trying with difficulty to establish military-technical cooperation (MTC) with India, which Moscow and New Delhi have already achieved long ago, and both countries have already moved to the next level.”
And Russian-Indian cooperation in the field of arms and military equipment supplies “was built on Make in India rules even before this program was widely publicized.”
An example of a new area of bilateral cooperation is the North-South Transport Corridor (INSTC), which connects India to Russia via Iran and the Caspian Sea. In November 2018, Russia opened a credit line of 3 billion euros intended to finance this project.
INSTC is the shortest multimodal transport route that connects the Indian Ocean and the Persian Gulf via Iran with Russia and Northern Europe. In the first three months of 2023, traffic on this route has more than doubled.
In September 2023, during the G20 summit held in India, a number of countries announced the “Middle East Corridor”, which is planned to stretch from India through the UAE, Saudi Arabia, Jordan and Israel to Europe. Only a month later, however, the Indian publication Business Today reported that the sharp aggravation of the situation in the Middle East “may stop the implementation of the IMEC transport corridor project”.
Meanwhile, the high-speed rail and road route from India to the Russian Federation and on to Northern Europe via Iran is much shorter than both the already existing Southern Sea Route and the planned IMEC. It is also independent of the functioning of the Suez Canal.
India aims to attain developed country status by 2047. In this case, the country will face a transition from an economic structure that is still based on the agricultural sector to the level of one of the world’s leading centers of industry and high technology.
Without increasing the pace of economic development, it is hardly possible to overcome this gap in such a short time. Such ambitious goals are unlikely to be realized in the context of growing dependence on Washington. On the contrary, diversification of economic contacts is necessary.
Moscow has a lot to offer its long-time friend and strategic partner. In particular, we are talking about new opportunities for cooperation in Central Asia, the Russian Far East, and also in the Arctic. The potential for cooperation in the field of information technology, where the two countries complement each other to a great extent, is also significant. Agriculture, food industry, biotechnology, pharmaceuticals and a number of other fields also offer great opportunities for Russian-Indian cooperation.
Late last year, Indian Foreign Minister Subrahmanyam Jaishankar visited Russia. A meeting between the leaders of Russia and India can be expected to take place during the BRICS summit scheduled for June in Kazan.
The summit may give a new impetus to the process of strengthening cooperation between the leading powers of Eurasia. This year will show the extent to which India is ready to rely on a time-tested partner in Moscow. Which, in turn, is interested in reducing tensions in India-China relations.
Against the background of US attempts to use India as a tool in its struggle with Beijing, as well as Trump’s threats to declare a trade war on almost the entire world if he returns to the White House, such a scenario would seem reasonable and strategically calibrated. .
The current Indian leadership sets ambitious and long-term goals designed to strengthen the country’s international standing and its status as one of the leading global players; while generating new opportunities for accelerated development and economic growth.
India, not without reason, claims to be a swing state, a power capable of influencing the distribution of the overall balance of power, at least in the Eastern Hemisphere. However, such an important and promising role requires the country, which must simultaneously overcome a number of complex internal and external challenges, to look for new sources of resources for further development and maintenance of internal stability. And also the skills and abilities to consistently and firmly defend national interests without losing old friends and allies.
Translation: ES
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