Indian continued to capture the imagination of leading economists.

Indian
economy has continued to witness a sustained period of growth since the widely
acclaimed economic liberalization of the country in 1991. While the country
might have gained its hard fought political freedom in 1947, India truly
emerged from the shackles of stifling bureaucracy and let loose the reigns of
economic development in 1991. With the opening up of key sectors to foreign
investment and end of license raj, Indian growth story has continued to capture
the imagination of leading economists.

 

Today,
in the wake of a stable political regime and a host of economic reforms, it
comes as no surprise that leading institutions such as HSBC and Morgan Stanley are
pegging India to become the third largest economy in the next 10 years while Fitch
estimates India’s GDP growth to be the highest among ten major emerging
economies.

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This
optimistic view is a result of a host of reforms undertaken by the present
government to infuse foreign investment, restructure public debt, widen tax
base, increase spending on public infrastructure, bring in efficient tax
reforms (GST) and revive manufacturing. The combined effect of these reforms is
expected to offset the temporary hiccups faced as a result of demonetization
and GST, and is likely to result in a growth of 7-8% in the next five years.

 

Encouraging
foreign Investment

A
stable political setup that rides on the promise of sustained growth of a
country is closely tied to how well a country can achieve its development
targets. India is no exception to this rule and is favorably placed with a
stable political regime that won with an absolute majority since 1984 elections
and started the “Make in India” campaign. This initiative, targeting both
multinational and domestic companies to set up manufacturing units in India, is
geared towards encouraging in-flow of funds in the economy. In view of this,
government has made sustained efforts to improve the business climate, which
has resulted in improved ease of doing business. India’s ranking on “World
Bank ease of doing business report 2018” rose to 100 from130 in 2017. The
government also recently liberalized rules for FDI in single brand retail,
power exchanges and construction.

 

Infusing
Capital into PSBs to encourage lending

In
recent months, government has announced plans to infuse nearly Rs. 2 lakh crore
capital into PSBs over a period of next two years, a move that is likely to unlock
lending for private investments and hence have a positive impact on India’s
growth numbers.

 

Efficient
tax reforms

The
much-awaited Goods & Services Tax (GST) rolled out in July 2017 with a view
to introduce a uniform tax system and expand tax base. This new system, as
stated by IMF in its 2017 report, is expected to improve the business
environment fostering both employment and innovation.