Economy of $ 5 Trillion: Difficult But Not Impossible to Achieve

Dr. BK Mukhopadhyay

(The writer, a noted management economist and international commentator on ongoing business and economic affairs, can be reached at m.bibhas@gmail.com)

Why not to go for a long drive so that India’s foreign image is bolstered in a time-bound manner? The environment is not that gloomy as some like to paint in a biased manner. The current interest expressed by a number of big economies cannot be sidelined – France, the UK, the USA and the like.

The latest: despite reeling from the impact of the worst-ever attacks on its oil installations, Saudi Arabia has said that it is looking at investing $100 billion in India in areas of petrochemicals, infrastructure and mining, among others, considering the country’s growth potential. Saudi feels that India is an attractive investment destination for the kingdom and it is eyeing long-term partnerships with India in key sectors like oil, gas and mining. More than 40 opportunities for joint collaboration and investments between India and Saudi Arabia across various sectors have already been identified.

What is more the oil giant Aramco’s proposed partnership with Reliance Industries reflected the strategic nature of the growing energy ties between the two countries. It is being appreciated that investing in India’s value chain from oil supply, marketing, refining to petrochemicals and lubricants is a key part of Aramco’s global downstream strategy. That is why Saudi Aramco’s proposed investments in India’s energy sector, such as the $44-billion West Coast refinery and petrochemical project in Maharashtra and a long-term partnership with Reliance, represent strategic milestones in our bilateral relationship. Vision 2030 of Crown Prince Mohammed bin Salman will also result in significant expansion of trade and business between India and Saudi Arabia in diverse sectors. The current bilateral trade of $34 billion will undoubtedly continue to increase.

Though Saudi Arabia and Pakistan are leading members of the Organization of Islamic Cooperation (OIC) and that Saudi Arabia was one of the strongest supporters of Pakistan during Pakistan’s wars with India, especially opposing the creation of Bangladesh from Pakistan’s eastern wing in 1971, yet recent trends indicate that the bilateral ties are on the rise.

Reasons to Be Proud of

The reality cannot be underestimated - India is the 17th largest export economy in the world and the 45th most complex economy according to the Economic Complexity Index (ECI). Insofar as exports performance is concerned India has been able to better the performance in big markets - the top export destinations are still the United States, origins are China, the United States, the United Arab Emirates, Switzerland and Saudi Arabia. The plus point here is that India’s export basket has not been small – right from sports goods up to spices.

India has also been one of the largest 10 EU trading partners!

Indian machinery and mechanical appliances are not only asserted in terms of quality, but prices are also very competitive compared to other countries. Indian textile brand and accessories are created based on the development of mechanical engineering.

India is the third largest chemical producers in Asia and the sixth largest in the world.

Of which, large chemical production accounted for 39%, followed by agrochemical products accounted for 20.3%, specialized chemicals accounted for 19, 5%, the rest are pharmaceuticals and biotech products.

India is the one of the world’s top rice exporters for continually. Basmati rice is different from ordinary rice with a very fragrant aroma and when cooking rice grains twice as long as its original appearance, basmati rice is a natural gift from India for gourmets, suitable for both dieters and diabetics. Non-basmati rice mainly to African and Asian markets, while high quality basmati rice is mainly to the Middle East, the United States and the United Kingdom.

India ranks sixth in the world (behind Thailand, Indonesia, Vietnam, China and Malaysia) for natural rubber production and is the third largest consumer of this product. In recent years, India exports rubber raw materials and rubber products.

Coffee exports have been rising due to high demand from traditional buyers such as Italy and Germany, Belgium.

Shrimp and frozen fish are the leading export commodities of India, America and Southeast Asia are the main importers of seafood in India, followed by the European Union (EU), Japan, the Middle East and China.

India’s petroleum industry is one of the fastest growing industries and is very important for the development of the country and for other industries.

India is a crude oil importer. Over the past few years, the economy has grown significantly, especially with a 7% increase in GDP in 2014 - 2017. Demand for oil has increased sharply. India alone accounts for over 20% of demand and imports about 80%.

Though petroleum, followed by gems and jewelry, pharmaceutical products, transport equipment, machinery and instruments, readymade garments, metals, electronics, rubber/glass and products, cotton, yarn and fabrics are performing well , yet IT, Business Process Outsourcing (BPO) and software services are growing faster than other exports.

Undoubtedly Huge Tasks Ahead: Better to Emphasize on Speed and Stability

The emerging fact, therefore, is fundamental changes in priorities and strategies are needed over the next two decades if current trends are to be reversed, especially with a view to: alleviating poverty, by emphasizing the production of basic goods and services and by generating income to meet basic needs; protecting the environment, by conserving and rehabilitating watersheds, arresting land degradation and desertification and conserving biological diversity.

Time is ripe for adopting practical realistic strategies that could ensure food, water and energy security. This involves (i) empowering key actors and enhancing positive action by assigning top priority to the public sector and enabling it to play a leading role in creating conditions for all stakeholders to function effectively; (ii) supporting the development of an effective and transparent market mechanism; (iii) improving the efficiency of the informal sector by providing legal, institutional and other support mechanisms.

Finally, urban and rural regions have to receive simultaneous attention, backed by perfect implementation. Industrial, banking growth essentially depends on this aspect spatially, temporally, functionally and sectorally indeed. The series of measures that the Government has been taking must be well-knitted and interactive.

Clearly, keeping in view the sluggish growth of the rural counterpart techno-economically and environmentally sound farm and non-farm activities, jointly, has the latent strength to turn the backward ‘depressed corridor’ into a developed region - ultimately helping to attain sustainable development. This has assumed to be of utmost importance in this part of the country since the scope for big industry remains a far cry. Income and employment generation via this process if integration, in turn, could reduce the incidence of regional disparity, spatially, temporally, hierarchically and functionally.