China Research

India’s enormous elections to the Lower House (Lok Sabha) are over. The big winner is Narendra Modi from the hindu-nationalist BJP who even achieved absolute majority in the new Indian parliament. Modi’s victory did not come as a major surprise – but the way he did it, including his very successful marketing.

During Modi’s previous period as a Prime Minister, the Indian economy already improved but certainly not as successfully as described by Modi’s supporters at home and by major parts of the global financial and corporate sector (which can be read about in some previous blogs of mine on chinaresearch.se).

The shortage of resources

Still a lot of weak issues have to be improved or reduced in the “continent” of India. Institutions (for example, quite a number of the new parliament members are even crime-suspected), poverty, the environment, agriculture with still more than 50 percent of total employment, income distribution, productivity, competitive manufacturing to a quite high extent – just to mention a few areas on a long list.

Looking at all these challenges, the forthcoming five years will not be easy for the BJP, Prime Minister Modi and his allies. Political tensions exist mainly with Pakistan. Relations with China seem to be commercially pragmatic but not very good either (which is demonstrated by India’s more or less total neglect of China’s prestigiously favored Belt & Road Initiative).

For the above-mentioned and quite a number of other reasons, India is certainly a country lagging institutional, educational and particularly financial resources to achieve rapid – i.e. at the same time fundamentally sustained – progress in production, infrastructure and the environment. High public debt on all levels is a frequently neglected impediment to even higher growth and to a more favorable distribution of income.

However, the economy of India has the potential to improve further during a long period of time. Macroeconomic growth data alone, however, remain an insufficient analytical tool – a reality that many (Western) analysts to not apply the way they should. Not to forget India’s demographic potential which – theoretically – is much more favorable than China’s in the forthcoming decades.

“Theoretically” because India also must create the necessary institutional and financial resources. And here we come back to the shortage issue of necessary resources …

Hubert Fromlet Affiliate Professor at the School of Business and Economics, Linnaeus University Editorial board   Back to Start Page