2024-04-18 08:26:36
D-1 in India for the legislative elections. The BJP, the party of Prime Minister Narendra Modi, is favored because of its excellent economic record. A success that is nevertheless contested, including in business circles.
L’Inde will become the third world power by 2029, that is to say before the end of his next mandate, promises Narendra Modi, with solid arguments in his favor. Growth has been vigorous for several years, 6.8% for this year, according to IMF forecasts. The major projects launched since he came to power have significantly improved the daily lives of Indians and boosted economic activity. And finally, the country is now benefiting from investments by multinationals leaving China since Covid. The BJP and Narendra Modi are doing tons on this flattering trajectory. In reality, denounces a former governor of the Central Bank, India is still and will remain a poor country.
A very relative enrichment
This ultra-rapid and solid growth is too weak to improve the standard of living of the 1.4 billion inhabitants. The per capita income is only $2,600 per year. This is the lowest of the Brics, as well as the G20, returning India to 139th place in the world rankings in terms of wealth per capita.
Over the past ten years, the number of billionaires has tripled, but the income of the vast majority of Indians has stagnated. With so little redistribution, it is difficult to see how the internal market can sustain growth. The most glaring symptom of this poverty is unemployment at 8% – the activity rate is very low, women are almost absent from the labor market. Most Indians make a living thanks to the informal sector, light years away from the prosperity of the middle class employed in services.
No Chinese miracle on the horizon
The opening of export-oriented factories, like that of Apple to manufacture iPhones, is a benefit for the industry, and therefore, for Indian employment. But we should not exaggerate the effects either. Foreign investors are thinking about diversification, they no longer want to depend on a single country, but India only benefits from a small part of this vast relocation movement.
Support for tech, displayed as a priority by the government, is good in itself, explains another former governor of the Central Bank, Raghuram Rajan, also very critical of the very romanticized story of the Indian Prime Minister’s economic successes. But, according to him, this is insufficient to give work to everyone. We must, he recommends, look towards the country’s traditional industries and improve the investment environment. An area where much remains to be done, believe Indian entrepreneurs.
Some prefer to go to Singapore to set up a start-up, due to lack of confidence in the environment of their country. Political arbitrariness, protectionist measures that are still too numerous in industry, and the weakness of the internal market are among the most frequently identified obstacles, including among the great economic dynasties totally committed to Narendra Damodardas Modi.
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