India's economy and elections: Is the hype around Narendra Modi's vision justified?

New Delhi/London
CNN
—

In In a few days, India will start becoming the largest country in the world Democratic elections.

More than 960 million people in the country of 1.4 billion are eligible to vote, just over a month from Friday. Narendra Modi is widely expected to serve a third consecutive five-year term as Prime Minister.

Under his leadership, India is poised to become a 21st century economic powerhouse A real alternative Investors and consumer brands are hunting for growth and manufacturers are looking to reduce risks in their supply chains.

While relations between Beijing and the West have increasingly soured, India enjoys healthy relations with most major economies and is aggressively attracting large companies to set up factories in the country.

So, is the hype surrounding Modi's largely poor India justified?

The quality of India's economic data can be unreliable, making it difficult to assess the ground reality in the world's most populous country.

But using data from official or official sources, CNN has created five charts to show how the country has fared since Modi first came to power in 2014, and to anticipate the challenges the next leader will face in managing the world's fastest-growing giant. economy.

Economy of India Worth $3.7 trillion in 2023, it was the fifth largest in the world, moving up four places in the rankings during Modi's decade in office.

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The South Asian giant's economy is poised to expand at an annual rate of at least 6% over the next few years, but analysts say Aim for growth 8% or more If you want to become an economic superpower.

Sustained expansion will propel India up the ranks of the world's largest economies, with some observers predicting it will overtake the US and China in third place by 2027.

However, India can do more to raise its gross domestic product (GDP) per person, which ranks it low on measures of living standards. 147 by 2022, according to the World Bank.

According to Guido Cozzi, a professor of macroeconomics at the University of St. Gallen in Switzerland, when an economy grows, there are „trickle-down effects on GDP per capita.” But he cautioned that „the economy is not guaranteed to reduce income inequality, and policies that promote inclusive growth may be necessary.”

how much As China did three decades ago, India is embarking on a major infrastructural transformation, spending billions building roads, ports, airports and railways. Meanwhile, private investors are building World's largest green energy plant.

In federal this year In the budget alone, $134 billion was carved out for capital spending to boost economic expansion.

The effects can be seen on the ground as furious construction is underway across the country. Between 2014 and 2023 India added nearly 55,000 kilometers (about 35,000 miles) to the national highway network, a 60% increase in overall length. Infrastructure development has many benefits to the economy, including creating jobs and improving the ease of doing business. .

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In recent years, the country has also developed various technology platforms – known as digital public infrastructure — It turned out to be Life and Businesses.

For example, the Aadhaar scheme, launched in 2009, has provided proof of identity to millions of Indians for the first time. The world's largest biometric database has helped the government save millions by reducing corruption in welfare initiatives.

Another platform, Unified Payments Interface (UPI), allows users to make payments instantly by scanning a QR code. Indians from all walks of life have adopted it, from coffee shop owners Beggarsand allowed millions of dollars to flow into the formal economy.

In September 2023, citing a World Bank report, Modi said Thanks to its digital public infrastructure „India has achieved financial inclusion goals in just six years, otherwise it would have taken at least 47 long years.”

The excitement surrounding India's growth potential is reflected in its stock market. The record is reaching its peak. The value of companies listed on India's stock exchanges crossed $4 trillion at the end of last year.

India has two major exchanges: the National Stock Exchange of India (NSE) and Asia's oldest stock exchange, the BSE, formerly known as the Bombay Stock Exchange.

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Thanks Sizzling The NSE has overtaken both the Shenzhen Stock Exchange and Hong Kong to become the world's sixth-largest stock exchange, the Federation of World Stock Exchanges said in January.

Domestic investors, retail and corporates have driven India's stock market to unprecedented highs.

According to Macquarie Capital, retail investors account for only 9% of India's stock market value, while foreign investors account for slightly less than 20%. However, analysts expect foreign investments to pick up in the second half of 2024, in the absence of elections.

The Modi government is actively trying to capitalize on the massive rethinking going on among companies about supply chains. International companies are looking to diversify their operations away from China, where they have faced restrictions during the pandemic and are threatened by rising tensions between Beijing and Washington.

Asia's third-largest economy has launched a value-added manufacturing-linked stimulus plan $26 billion It will attract companies to set up production in 14 sectors ranging from electronics and automobiles to pharmaceuticals and medical devices.

As a result, some of the world's largest companies, including Apple (APL) supplier Foxconn is significantly expanding its operations in India.

Billionaire Elon Musk announced last week at X that he “Looking forwardTo meet Modi in India, without specifying a date. Tesla (D.S.L.A) boss is expected to announce a major investment in India soon, along with the carmaker is reported The country is looking for a suitable location for its first Asian factory outside China.

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Until a couple of years ago, Apple usually started assembling models in the country Seven to eight months After launching. It changed September 2022Apple has started manufacturing the new iPhone 14 devices in India just weeks after they went on sale.

Analysts say this shift in strategy is a big win for Modi, as growing manufacturing ties with US giants like Apple will attract other global players in the electronics manufacturing ecosystem to India.

According to market research firm Canalys, 23% of iPhones will be manufactured in India by the end of 2025, up from 6% in 2022.

However, India's economy, like its democracy, is far from perfect. If Modi is re-elected, he will have to tackle the biggest challenge of creating crores of jobs for the masses living in poverty.

with a Average age is 29 yearsIndia has one of the youngest populations globally, but the country is yet to reap the potential economic benefits from its large, youthful population.

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According to a report released last month International Labor OrganisationEducated Indians between the ages of 15 and 29 are more likely to be unemployed than those without schooling. „A mismatch with their aspirations and available jobs.”

It added that India's youth unemployment rate is now higher than the global rate.

The unemployment rate among Indian youth with a bachelor's degree is over 29%, almost nine times higher than those who cannot read or write, the report said.

„The Indian economy has not been able to generate enough remunerative jobs in non-agricultural sectors to absorb the new educated youth labor force, which is reflected in the high and rising unemployment rate,” it added.