The biggest democratic election in history will begin in India in a few days.In a nation of 1.4 billion, there are an estimated 960 million eligible voters. The elections begin on Friday and will take more than a month to finish. Most people predict that Narendra Modi will win a rare third consecutive five-year term as prime minister.India is positioned to emerge as a major global economic force in the twenty-first century under his direction, providing a viable substitute for China for manufacturers seeking to lower supply chain risks and investors seeking consumer brands seeking expansion.While ties between Beijing and the West are becoming increasingly frayed, India enjoys healthy relations with most major economies and is aggressively wooing large companies to set up factories in the country.
So, is the hype around Modi’s India, which remains a largely impoverished country, justified?The South Asian giant’s economy is comfortably placed to expand at an annual rate of at least 6% in the coming few years, but analysts say it should be targeting growth of 8% or more if it wants to become an economic superpower.Sustained expansion will push India higher up the ranks of the world’s biggest economies, with some observers forecasting the country to become number three behind only the US and China by 2027.The South Asian giant’s economy is comfortably placed to expand at an annual rate of at least 6% in the coming few years, but analysts say it should be targeting growth of 8% or more if it wants to become an economic superpower.
Sustained expansion will push India higher up the ranks of the world’s biggest economies, with some observers forecasting the country to become number three behind only the US and China by 2027.The South Asian giant’s economy is comfortably placed to expand at an annual rate of at least 6% in the coming few years, but analysts say it should be targeting growth of 8% or more if it wants to become an economic superpower.Sustained expansion will push India higher up the ranks of the world’s biggest economies, with some observers forecasting the country to become number three behind only the US and China by 2027.For example, the Aadhaar program, launched in 2009, has provided millions of Indians with proof of identity for the first time ever. The world’s largest biometric database has also helped the government save millions by reducing corruption in welfare initiatives.Another platform, the Unified Payments Interface (UPI), allows users to make payments instantly by scanning a QR code. It has been embraced by Indians from all walks of life, from coffee shop owners to beggars, and allowed millions of dollars to flow into the formal economy.
In September 2023, citing a World Bank report, Modi said that thanks to its digital public infrastructure “India has achieved financial inclusion targets in just six years which would otherwise have taken at least 47 long years.”The excitement around India’s growth potential is reflected in its stock market, which has been hitting record highs. The value of companies listed on India’s exchanges surpassed $4 trillion late last year.India has two major exchanges: the National Stock Exchange of India (NSE) and the BSE, Asia’s oldest bourse formerly known as the Bombay Stock Exchange. Thanks to the sizzling rally, the NSE has overtaken both the Shenzhen Stock Exchange and the Hong Kong Exchange to become the world’s sixth largest bourse, data from the World Federation of Exchanges showed in January.
Domestic investors, both retail and institutional, have been driving India’s stock market to unprecedented peaks.According to Macquarie Capital, retail investors alone own 9% of India’s equity market value, while foreign investors are at slightly less than 20%. Analysts, however, expect foreign investments to pick up in the second half of 2024, once the election is out of the way.Asia’s third largest economy has launched a production-linked incentive program worth $26 billion to attract companies to set up manufacturing in 14 sectors, ranging from electronics and automobiles to pharmaceuticals and medical devices.As a result, some of the world’s biggest firms, including Apple (AAPL) supplier Foxconn, are expanding their operations significantly in India. Billionaire Elon Musk said last week on X that he is “looking forward” to meeting Modi in India, without giving a date. The Tesla (TSLA) boss is expected to announce a major investment in India soon, with the automaker reportedly scouring the country for a suitable location for its first Asian factory outside China.
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