India, an Emerging Power

Why does India stand out from its peers? What is so special about this country? Will it become the next superpower? And if so, is it because of its industrial structure? Or the changing in the population organization? Or the combination of other factors?

India became independent in 1947 and this came with a lot of problems, being the most relevant one extreme poverty. At this time, India chose a mixed policy to kick-start its development, attempting to balance the role of the market and the state. Although heavy industrialization had begun, in the 90’s, this policy showed to be a complete failure and had not produced the desired results. Due to an extreme crisis in 1991, India opted for the liberalization of its economy, having several market reforms. Gradually the tariff barriers were reduced, and foreign direct investments were allowed. During the two following decades, the GDP growth rate improvement averaged 7% per year and the technological and telecommunications sectors started developing. After years of political instability, in 2014, a stable government assumed power and since then growth has been the norm.


It is safe to say that India’s key factors for growth and economic strengths are:

  • A young and rapidly growing working-age population. India has the world’s second largest population and about 50% is below the age of 24. This will act in their favour because, in the following years, while some powerful nations will witness a decrease in their workforce, India is expected to have an increase;
  • Foreign language skills, it is the second largest English-speaking country in the world; 
  • A rising education and engineering skill levels. The government has asked several times for updates of the training programmes to ensure young people have contact with the latest technology;
  • Political stability and friendly political reforms. India’s democratic government has lasted for60 years and measures like “The Swachh Bharat Mission” (aims to keep the public places clean and change people’s attitude towards sanitation) and “Make in India” (which is a programme that includes initiatives to simplify investments and protect intellectual property rights).

All this helps India being the most prominent emerging country to invest. Also, it is attractive for Transnational Corporations, like Toyota, Volvo, ASDA and Virgin to open factories and offices. However, India is no paradise. It has problems like poverty and economic inequality, under nutrition, child labour, high percentage of households without proper sanitation. The World Bank’s international poverty line of $1.125 per day lets us know that 42% of the Indian population still lives below that line. With poverty comes malnutrition and 30% of Indian children are underweight. Furthermore, the country has poor infrastructures which harden the path for it to become a super nation.

Today, India is considered as the World’s sixth-largest economy by nominal GDP and the third largest by PPP (purchasing power parity). Economists and Researchers at Harvard University projected a 7% annual rate growth till 2024, which will put it ahead of China, and also, the prospects are that its GDP could overtake the one from USA before 2050, making India the fastest growing and strongest economy in the world.

It can be concluded that India’s per capita income has grown ten times in the last sixty years, yet it still has a long way to go. Matters like poverty, hunger, basic sanitation, literacy rates need to be endorsed with more effective policies. Besides all of this, it seems that India will thrive and become one of the largest economies worldwide and an economic role-model for lots of   developing countries

Article published in our February Newsletter

Margarida Pardal, BSc in Economics

Published by lisboninvestmentsociety


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