New Delhi has reason for its economic triumphalism.
The nation’s economy is on a roll and the government predicts growth will top 8% for the second half of the year – putting it in the same league as rival China.
Meanwhile, the stock market has shot up to record highs and foreign exchange reserves have topped $100 billion.
“This is not unreal, this is not euphoria. This is real. The Indian economy is heading for higher growth,” said Anand Mahindra, president of the countrys leading industry association, the Confederation of Indian Industry.
Peace moves with Pakistan have
The new upbeat mood has been triggered by a sudden spurt of growth in a host of industries.
The mobile phone industry, for instance, is selling two million new connections each month, making India one of the world’s fastest-growing telecommunications markets.
Similarly, the auto industry is driving into the fast lane with nine-month sales up by 30% over the same period last year.
In fact the mood is so buoyant the ruling Bharatiya Janata Party-led coalition is planning early polls in April or May to exploit what deputy prime minister Lal Krishna Advani calls the “feel-good factor” reigning in India.
More than a decade after starting to open up its economy to the world, economists say the country finally looks poised to take off.
Foreign investors certainly believe so, pumping a record of more than $7 billion into the stock market in 2003 and driving up the key Bombay share index 73% and the rupee close to four-year highs.
Signs of growth
Meanwhile, India is hitting the headlines internationally for taking jobs from the west, rather than for its teeming slums and rural poor.
The fledgling business process outsourcing (BPO) industry has grown by almost 70% this year and is hiring about 500 people a day.
The industry employs 170,000 – and thats scheduled to touch 1.1 million by 2008.
Growing numbers of companies are shifting software development, call centres, accounting, insurance claims processing and other jobs to India to take advantage of its low-cost, English-speaking, highly skilled workforce.
About 220 of the Fortune 500 companies around the globe already outsource their informational technology needs to India and more are shifting every day.
“India is the brand to beat. It’s the default brand,” said Partha Iyengar, research vice-president at US-based technology research house Gartner India, referring to India’s high technology skills.
Multinationals, domestic firms and investors alike are also salivating at prospects of a nation of more than one billion where the consumer market still has vast potential.
“India cannot afford to be complacent. The quality of living has to be the birth-right for every Indian”
For instance, just 31.6% of 192 million households own a TV set and 2.5% have a car, jeep or van, 2001 census figures show.
And the growth of the past decade has put more money in the pockets of the expanding middle class, seen at 250 million to 300 million who are opening up their wallets and spending in shopping malls that have sprung up across India.
Spending has been jump-started by a drop in interest rates to 30-year lows, as well as by the best monsoon since 1988.
Adding to the feel good mood is the fact that peace moves with long-time foe Pakistan are steadily gaining momentum.
Still, there are clouds hanging over the agriculture-heavy economy.
With 70% of India’s population dependent on the agriculture sector for income, a bad monsoon can slam the brakes on growth.
Corruption and red tape are still rampant although industry leaders say the situation is slowly improving.
Inflation is over 6%, but economists say recent duty cuts should bring the rate down soon to a more acceptable 4-4.5%.
And federal and state governments are running a hefty combined deficit of nearly 10% of GDP.
Social activists say India’s poor are being forgotten in the heady burst of consumer spending.
One quarter of the population, or 260 million, are reckoned by President APJ Abdul Kalam to live beneath the poverty line.
“India cannot afford to be complacent,” said CII’s Mahindra. “The quality of living has to be the birth-right for every Indian.”