What can the spin offs be for the Indian economy from Prime Minister Narendra Modi’s visit to the United States? In tangible terms and from a strategic perspective, it is going to be the defence deals – especially the GE 414 jet engines, the 31 MQ9B Predator Drones apart Micron’s semiconductor investments. These are deals aggregating to around $ 6 billion with semiconductors also having ripple effects in terms of employment creation and attracting new talent to this sector.
But to political commentators and economists feel, there is also much to be hoped for from the possible intangible gains. Certainly, a Microsoft, Google or even Elon Musk now, need no convincing about the India story and the growth potential in the fastest growing large economy of the world. As Apple’s decision to make mobile phones in India shows, India is now both the consumer and a potentially reliable maker of any pricey tech gadgetry. However, this visit could be a chance to take the India story to the political elite of America – the senators and congressmen, many of whom perhaps from mid-America, who may need to be impressed upon the strategic error the US made right from the Richard Nixon-Henry Kissinger era in the 1970s of putting all the bets on China.
The timing of Prime Minister Modi’s visit could not have been at a more opportune time considering that the economic indicators from India stand out. Be it on price stability with inflation (CPI) during March-April 2023 down to 4.7 per cent in April, the lowest reading since November 2021. Though some economists expect it to rise again, the number is closer to the target of 4 per cent than it has ever been in recent times. India’s real gross domestic product (GDP) recorded a growth of 7.2 per cent in 2022-23, stronger than the earlier estimate of 7.0 per cent. It has, as emphasised by the Reserve Bank of India governor Shaktikanta Das, “surpassed its pre-pandemic level by 10.1 per cent.” Plus, “the external debt to GDP and international investment position (IIP) to GDP ratios continue to improve.”
That these make India the fastest growing large economy in the world and a more reliable English-speaking partner, is perhaps the message to the US Congressmen at a time when there are global headwinds. In fact, the word “uncertainty” figured as many as 60 times in the IMF’s last global outlook in April. The Reserve Bank of India has also been referring to the global headwinds and the tailwinds in India. Also, in a world that is witness to a renewed phase of turbulence, fresh headwinds from the banking sector turmoil in the US, the banking sector in India has been able to weather several financial shocks thus far and is today among the most profitable in the world with tight regulations while also retaining and building on the digital depth in financial services.