Importance of India to the World Economy

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  • Topic: India, Government of India, President of India
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  • Published : October 4, 2012
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Importance of India to the World Economy
India’s staggering population, entrepreneurial spirit, and consumer-led demand for products has placed it among the emerging market nations known as the BRIC (Brazil, Russia, India, and China) countries. These nations are widely believed to be the next financial juggernauts that will become key players in the global economic framework. In the past several decades, India has undertaken massive reform to its financial policies. These policies have opened the door to increases in consumption of Indian goods abroad. Once an insular country, India has become more open to direct foreign investment, increasing real estate profits and acquisitions of businesses, and it has undergone a technology boom that challenges even leading nations in the economic circle. However, India has challenges, including a hesitance to fully open trade channels, rising inflation, and a strong caste system which impacts its ability to operate in the same vein as other democratic nations. It will remain to be seen whether India can sustain its emerging growth potential. What are the current economic indicators for the assigned country that clearly demonstrate that this country is on a consistent growth path and that this will play an important role in the 21st century world economy? The economic recession that has plagued the United States for the past several years has impacted the world economy as well, and India has not escaped the ramifications of the financial meltdown. However, even with the declines that have plagued growth around the world, recent reports indicate a slow, but steady upward pattern for the nation – encouraging news. In December 2011, the Organisation for Economic Co-Operation and Development, a membership-based organization headquartered in Paris, France, released the results of its bi-annual economic survey, aimed to identify and track the development and growth of industrialized nations, including those within the emerging markets category. While the gains were modest and below the long-term average anticipated by the OECD as a whole, India’s status improved over months previous. Perhaps of even greater importance was that the status of other markets, including China and Brazil, declined, pointing to a potential upswing in India’s global economic profile. As part of the surveys conducted by this group, OECD also charts the growth of industrialized countries in the graph shown below from years 2005 to 2010: GDP growth in India, other large emerging economies and the OECD In per cent

Source: OECD
Clearly, next to China, a country with arguably greater resources, India’s economy is steadily growing. The period beginning with 2008 visualizes the start of the global recession, but each subsequent year shows marked improvement, in particular, a substantial increase from the year 2009 to 2010. Not only does India’s economic outlook seem to be improving, but its profile in the world is changing, moving from the long-held perception of the country as a dusty, rural and highly-stratified drain on resources to one that is better known for its technological advancements than its lack of infrastructure. This is evidenced by the attention paid to it by some of the most prominent, and powerful, countries in the world, including the United States. As recently as April 17, 2012, the United States engaged in talks with the Indian government to discuss ways the two could partner and continue to improve relations with one another. During these discussions, Assistant Secretary, East Asian & Pacific Affairs, Kurt Campbell, said, “They (Indians) have an interest in strategic interactions...you would have seen the recent meetings between the Indian prime minister and the president of Korea...it reflects dramatically improving relations between India and other countries in northeast Asia, Japan, South Korea and also China as a whole. India's role in Asia extends to every dimension of national power --...
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