India’s economy, often likened to an elephant due to its perceived slow start but formidable impact, has shifted into a steady trot, gaining global attention and confidence. In contrast, China, the traditional engine of global growth, is experiencing a significant economic slowdown. India’s rise is underscored by its strong presence at international forums, including the World Economic Forum and the Group of 20 leaders’ summit. Prime Minister Narendra Modi’s leadership and the country’s scientific achievements, such as placing a spacecraft on the moon, contribute to growing economic optimism.
This positive outlook for India is occurring as China faces economic challenges, positioning India as a potential successor. With factors like a youthful population and thriving manufacturing, India’s economic potential is gaining recognition. Eswar Prasad, a professor at Cornell University, notes that India’s recent reforms are paving the way for substantial growth, attracting considerable interest from foreign investors.
In addition to economic factors, India’s warmer relations with the West, in contrast to the increasing suspicion toward China, make it an attractive investment destination. The country’s status as the world’s largest democracy further enhances its appeal in a world marked by geopolitical tensions.
While India’s economic resurgence has been met with optimism, it faces a massive gap with China, whose economy is nearly $15 trillion larger.
Both countries are expected to contribute significantly to global growth, with India needing sustained growth of 8% to surpass China as the largest contributor in the next five years. The International Monetary Fund projects India’s growth at 6.3% this year, while China aims for around 5%.
To achieve its ambitious growth targets, India must address challenges such as private sector investment. The Modi government is actively working to improve the business environment and attract more companies. Massive infrastructure investments, reminiscent of China’s approach three decades ago, are underway, with $120 billion allocated in the recent budget for capital spending. This includes extensive construction projects, such as expanding the national highway network by 50,000 km (about 31,000 miles) between 2014 and 2022. The government’s commitment to infrastructure transformation is a key component of India’s economic revival.
