EDITORIAL: Indian Prime Minister, Narendra Modi, during his visit to Dubai last year, signed a US- and Europe-backed trade corridor agreement with the United Arab Emirates (UAE) aimed at connecting Europe with India through parts of the Middle East (Mumbai-UAE-Saudi Arabia-Jordan-Israel-Eastern Mediterranean) by sea and rail.
India’s stature in the polity of nations has been steadily growing over the past decade and a potent indicator is the by now routine invitation to attend the annual meeting of the heads of government of the Group of Seven (G-7) most industrialised countries of the world. The invitation to attend began in 2019 followed by the ones in 2021, 2022 and 2023 - hosted by France, the UK, Germany and Japan, respectively, which held the presidency of G-7 in those years.
India’s international standing began improving after it was forced to delink from the Soviet system after its collapse and in 1991 (the same year that the country secured a Stand-By Arrangement (SBA) with the International Monetary Fund for the seventh time after it secured the first lending from the IMF in 1957.
India has repaid the entire amount against borrowing/lending that it had received mostly through Stand-By Arrangements (SBAs). It does not owe a single dollar to the IMF since 2000). Narasimha Rao, who came to power in June 1991, one week after the then prime minister Chandra Shekhar had resigned, embarked on indigenous reforms that ushered in an era of liberalisation which included (i) doing away with the permit system, defined as pervasive control and regulation of the Indian economy, (ii) reducing tariffs and interest rates which made Indian exports highly competitive leading to at present the country’s enviable foreign exchange reserves are at 616.7 billion dollars as of 26 January 2024; (iii) ended several public monopolies by floating shares and limited public sector growth to essential infrastructure, goods and services, mineral exploration and defence manufacturing; and (iv) allowed automatic approval of foreign direct investment in many sectors.
At present, automatic FDI approvals include manufacturing, construction and IT and up to 74 percent FDI is allowed for pharmaceuticals and defence, 49 percent for air transport services and private sector banking and up to 26 percent allowed to the print media.
India’s resolve to transform itself from a developing country into an industrialised economic powerhouse has allowed it to play an increasingly major role in the international arena with its severe human rights abuses in Illegally Indian Occupied Jammu and Kashmir ignored by Western countries eagerly seeking a market for their products as they grapple with recession. By 2019 India emerged as the fifth largest economy of the world by nominal Gross Domestic Product surpassing the UK, France, Italy and Brazil.
Copyright Business Recorder, 2024