As Narendra Modi becomes the first Indian prime minister in two decades to attend the World Economic Forum (WEF) at Davos, many eyes in the annual bazaar of global capitalism will be on him. Chinese President Xi Jinping set the ball rolling while speaking at Davos last year. Xi’s speech, at a time when China will soon overtake the US as the world’s biggest economy, was re-assuring in the age of growing American antipathy to globalisation. Xi had assured the world that China, like the developed West, will not look inward or turn its back on global economic integration. “There was a time when China also had doubts about economic globalisation, and was not sure whether it should join the World Trade Organization. But we came to the conclusion that integration into the global economy is a historical trend. To grow its economy, China must have the courage to swim in the vast ocean of the global market. If one is always afraid of bracing the storm and exploring the new world, he will sooner or later get drowned in the ocean. We have had our fair share of choking in the water and encountered whirlpools and choppy waves, but we have learnt how to swim in this process. It has proved to be a right strategic choice,” Xi had told Davos. Like Xi last year, Modi will be keenly watched by the Davos glitterati at a time when international organisations are predicting that India would overtake Germany as the world’s fourth-largest economy in the 75th year of its independence in 2022. “Modi is talking about globalisation and foreign policy has acquired a new dimension under the present government. I think PM Modi is going to be listened to very carefully at Davos though what he is going to say is unclear. Given that India has been performing strongly in terms of export growth, he will look to project India’s rise in the global economy. Especially with the US becoming increasingly protectionist under Donald Trump, economic growth in East Asia and China faltering, and a turmoil in Europe, the world will be looking eagerly at the role India can play in the global economy,” a former Reserve Bank of India (RBI) governor who did not wish to be named told Business Standard. Modi’s visit to Davos comes in the midst of a mixed bag of news for his government on the economic front. The good news is that India’s export growth in the first two quarters of 2017-18 has been rather phenomenal – averaging over 30 per cent. The composition of this export growth indicates that Indian manufacturing is picking up, even if it is to cater to project requirements in foreign shores. While gems and jewellery have traditionally made the bulk of the value of Indian exports, the latest government data show that growth in the export of engineering goods over the past few months has been in double digits. In September 2017, exports of engineering goods grew by 44 per cent when compared with the same month last year. Equally impressive double-digit growth figures have been achieved in the export of petroleum products, marine products and chemicals. While Davos is not known to make its dignitaries uncomfortable with thorny questions, the Indian prime minister might be inclined to highlight the perceived success of his government’s two major policy thrusts – knocking 86 per cent of the currency out of circulation and the unprepared roll-out of a universal goods and services tax that left millions of Indian businesses befuddled with its byzantine slabs. Economists, critical of his government, are armed with data that would suggest that the flaws in execution and formulation of these twin moves has disrupted and not reinvigorated the Indian economy. In 2017-18, Gross Domestic Product (GDP) grew at 6.7 per cent in the first half – the lowest since the Modi government was voted to power in 2014. The Index of Industrial Production (IIP) in 2017-18 is half of what it was last year. Agriculture growth this year has clocked a measly 1.7 per cent. The construction sector, which provides employment to millions, has also grown at an average of 2.6 per cent in 2017-18. This again is half of what it grew at last year. Meanwhile, retail inflation, given its wild variations, has averaged almost 5 per cent this year – significantly higher than last year. Despite these criticisms, the Modi government has been garnering a great deal of eyeballs at international forums for all the right reasons. For one, India is right on the money in the perception game with myriad indices and rating agencies giving India a double thumbs-up. India jumped 30 ranks in the Ease of Doing Business rankings, reportedly being one of the five top reformers. If this alone should not be making Modi the darling of Davos, the prime minister’s own acceptability on the global stage hit a new high with Washington DC-based Pew Research Centre’s research saying that nine out 10 Indians hold a favourable opinion of him. Then there was the much-criticised ratings upgrade from New York-based Moody’s. Then there was a The Economist which in a survey indicated that Indians enjoy more freedoms than Americans and French. Secondly, Modi’s presence in Davos comes in the light of positive economic predictions of India as an emerging lodestar in a changing global economic order. The International Monetary Fund (IMF) has predicted that India’s economy will grow at 7.4 per cent in 2018-19.

By 2022, India’s GDP growth would be averaging 8.2 per cent making it one of the fastest-growing big democracies in the world, much ahead of other big nations like China. In fact, by 2022, a year that Modi’s Bharatiya Janata Party (BJP) has set as a target to usher in a ‘new India’, is likely to see a world order in which India’s role becomes increasingly important if the IMF’s predictions are anything to go by. While India will become the fastest-growing trillion-dollar economy and overtake Germany as the world’s fourth-largest, advanced nations like thee US and euro zone countries are likely to see a further decline in their economic prospects. The IMF predicts that while the euro zone would grow by 1.5 per cent, the US would grow at 1.7 per cent; China’s growth rate would fall below 6 per cent. Clearly, India’s role in sustaining global growth would be next to none by the time the BJP’s vision of ushering in a ‘new India’ arrives in 2022.


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