The People’s Republic of China is struggling to save its economy from slowing down due to the precipitous drop in the Yuan and stocks. However, India is eyeing the slowing of China’s economy as a chance for it to emerge as an economic giant in the Eastern region. The international media agrees with this perception, provided it plays its cards well. India has an excellent position of profiting from the cheap oil. The economic tumult in China contributes partly in shielding the admirable position of India.
Reforming India’s Economy
India’s economy requires reform. Its Prime Minister, Narendra Modi, claims that he is the man who can spearhead the reform. And with China taking a nose dive and world markets concerned that an economic engine in Asia is heading for a hard landing, can India pick up the reins?
A question that begs an answer is this: does the fast-growing India have what it takes to calm global economic jitters?
This coming autumn, Mr Modi will visit Britain to sell the Indian brand. Rumors have it that he plans to grace an event at Wembley Stadium to celebrate the Indian immigrants that have made the United Kingdom their homes. The event aside, many say that if Modi helps his country to play the cards well in reforming its economy, the next two decades would witness an Indian economy dominating the Asian region the same way China did in the last two decades.
How to strengthen India’s domestic market
Slowness in China, improvement in India, elusive exports and reckless exchange rates are some of the events that have formed a complex web of interconnectedness. However, a single message emerges amidst all these complexities- structural reforms to boost domestic markets may help in offsetting disruptions that came with economic drowning in China. Therefore, India needs to be attentive to this message if it desires to eliminate or ease bottlenecks on its soil. It will go a long way in creating a stronger domestic market that has an ability of spearheading a higher economic growth. Additionally, the country will witness its exports gaining a more competitive edge in the face of any worldwide slowdown that China may trigger. How should Narendra Modi go about it? He needs to approach and convince all the political parties to pass a quality goods and services tax Bill. The resulting law could see India emerging to be a single common national market that delivers significant efficiency gains.
Foreign media agrees that China may soon pave way for the growing India if India seizes the opportunity of a falling economy in the former. Consumer spending in India is resilient. This can be an advantage to the country, especially if the demand in almost other countries decelerates. The Wall Street Journal says that the country is luring production companies to produce in it. The government hopes this can help spark a significant industrial revolution of 1.2 billion. Domestic demand has been fuelling economic growth in India for years, unlike in China, where manufacturing goods for international sale has been doing the fueling. Unlike countries such as Russia, Brazil, or South Africa, India has escaped domestic wrangles. Furthermore, it boasts of ample international reserves and a significant amount of independence from foreign capital in funding imports.
Why Modi is feeling a relief
The best position of India in benefiting from the falling oil prices coupled with the partial shielding due to China’s economic tumult are reasons why Modi is feeling relieved. He can now focus on proposals that would pose many challenges in passing them if the oil prices were skyrocketing. India is grinning as oil prices continue falling since more than 75% of its consumption depends on imports. The past year saw foreign exchange reserves increasing by 13%. Since January 2014, inflation more than halved while the current account deficit reduced by 93% within a period of two years. Furthermore, China’s meltdown does not affect India in a bad way as it does to the other countries in the region. For example, China received only 5.2 % of India’s exports in the last year. Singapore, Vietnam and Indonesia must be counting their losses since they depended heavily on Chinese market as an export destination.