When India committed $10 billion to the kitty of the International Monetary Fund (IMF) in April this year and its opinion was sought on how to overcome the worst global recession in six decades, it marked a major turning point in terms of its economic advancement as well as growing clout on the world stage.
For it was the same country that in July 1991 had to knock at the doors of the Bretton Woods twin seeking funds, under its particularly harsh and embarrassing structural adjustment programme, often seen as the last recourse of a battered economy.
More strikingly, every point raised by India and each suggestion made in the run up to the G20 summit in London April 2 - where the country was represented by Prime Minister Manmohan Singh - found a mention in the final joint communiqué of the leaders. In the past, the country was not even
extended an invitation to such forums, let alone getting a chance to influence the decisions.
For once, India also made it clear that it was not speaking for itself. It was also a voice for other countries, especially those at the bottom of the
pyramid. And that voice was also heard, as the world respected the fact that India’s $1.2 trillion economy was still performing reasonably well despite
the meltdown.
“We in India have been fortunate in having weathered the global downturn better than many others,” the prime minister said in London, adding: “While
India will be able to manage, many other developing countries may not be in the same position and this is where the international community can help.”
This transformation has been possible mainly on account of the impressive growth the nation has achieved during the past five years, logging close to
nine percent annual average expansion. And, while other economies were experiencing recessions, the country’s growth was only going to fall to
around 6-7 percent.
There are other positive sides to India’s growth story. It has foreign exchange reserves of over $250 billion, its annual rate of inflation is down
at nearly zero percent and it continues to boast of savings and investment rates of more than 30 percent. These factors, economists maintain, are
noteworthy as they are helping the country address the adverse impact of a drop in capital inflows.
“The world today looks at India with respect and hope,” said Manmohan Singh, the Oxford and Cambridge-educated professor-turned-politician, whose views were keenly sought by world leaders at G20 - from US President Barack Obama to Chinese President Hu Jintao.
The Indian leader said the country was respected for its calibrated reforms - of which he was the original author as finance minister in 1991.
This, he added, had resulted in growth with justice, helping the country address the global slowdown in a much better fashion than others.
At the same time, the prime minister added, the world also had great hope from the country as it was seen as an engine of growth for the global
economy as a whole.
In a recent editorial, leading publication The Economist - which also carried a 15-page special report on India - said the country had become a
part of the fast-growing success story along with China. “India’s recent self-confidence had two roots. One was the sustained spurt on economic growth to a five-year annual average of 8.8 percent. The other was the concomitant rise in India’s global stature and influence.”
In fact, many global consultancies and think tanks have been predicting that in the next 20-25 years, India will figure among the four largest global
economies, along with the US, China and Japan.
According to Jim O’Neill, head of the Global Economic Research Unit at Goldman Sachs and creator of the acronym BRIC - which stands for Brazil,
Russia, India and China - India had a great potential ahead if it integrated better with the world.
“In the next 20 years, India could be the single most powerful economic story in the world,” he said during a talk in Chicago recently, titled
‘Outlook for Emerging Markets’ organised by the Chicago Council on Global Affairs.
And some of these signs are already visible. India is now a member of the Financial Stability Forum and the Basel Committee on Banking Supervision.
These two forums, which define and influence the global financial architecture, were the exclusive bastions of eight rich nations, led by the
US.
In another sign of India’s growing clout, the Indian prime minister was extended the distinction of being one among just two of the 19 heads of
state or government at the G20 summit to deliver a talk on global economic management at a dinner at Buckingham Palace.
The Indian leader was also the only one whose full-page interview was published by the Financial Times, which traced his education at Oxford and
Cambridge as also his four-decade stint with policymaking in India and abroad.
These developments seemed to have impressed US Treasury Secretary Timothy Geithner, who hosted the finance ministers of 20 rich and emerging economies in Washington in April, including India’s Planning Commission Deputy Chairman Montek Singh Ahluwalia.
“Just looking at what is happening at the world economy, I certainly expect India to play a greater
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