"Indian Economy Doing Incredibly Well" says World Economic Forum Chief | Vantage with Palki Sharma

Summary

In an interview, World Economic Forum President Borge Bren discusses India's remarkable economic growth amidst global conflicts and recession fears. He highlights India's potential to become the world's third-largest economy by 2027, driven by policy reforms, infrastructure development, and a digitally literate young population. Bren also addresses global concerns over rising debt levels, emphasizing the need for strategic investment to maintain growth and competitiveness.

Takeaways

• 🌟 India is recognized as the world's fastest-growing economy and is projected to become the third-largest economy by 2027 despite global challenges.
• 🔍 The IMF predicts a global economic growth of over 3%, avoiding a feared recession, but there are concerns about geopolitical issues affecting trade and growth.
• 📈 India's economy is performing remarkably well, even though it is influenced by global conditions, with a trend growth of around 4% historically.
• 💹 India is on track to become a $10 trillion economy in the coming decade, which would make it the third-largest economy globally.
• 🚀 India's growth has led to significant poverty reduction, lifting 400 million people out of extreme poverty, a feat previously seen only in China.
• 🏗️ India's rapid infrastructure development, including new airports, trains, and roads, is a key factor in its economic growth.
• 💼 The Indian economy is becoming more open to foreign direct investment and providing a level playing field, which is attracting more businesses.
• 🔗 India is benefiting from the diversification of global value chains and 'friend-shoring', especially with increased manufacturing from countries like the US.
• 📱 The growth in India's services and digital economy is outpacing traditional manufacturing, with a digitally literate young population being an asset.
• 🆔 India's digital ID system has been crucial in facilitating economic transactions and increasing efficiency.
• 💡 Policy recommendations for India include investing the revenues from 8% growth into areas that will enhance its future competitiveness.
• 📉 There are concerns about rising debt levels, especially in developing countries, which could pose risks to the global economy if not managed properly.

Q & A

What is the current global economic outlook according to the IMF?

The IMF predicts that the global economy will grow more than 3%, despite the presence of two major wars and multiple conflicts.

How does India's economic growth compare to the global trend?

India is the world's fastest-growing economy and is expected to become the third-largest economy by 2027, defying global economic slowdowns.

What impact have conflicts such as in Ukraine and Gaza had on the global economy?

The conflicts have not yet escalated to a level that would severely impact trade and growth, but there is a concern that they could lead to a 'geopolitical recession'.

What is the role of India's economic reforms in its growth trajectory?

India's economic reforms have been crucial, with infrastructure development, opening up to foreign direct investment, and diversification of value chains playing significant roles.

How has India managed to lift millions out of poverty?

India's growth has led to the eradication of poverty at an impressive scale, lifting over 400 million people out of extreme poverty.

What is the significance of India being a democracy in achieving its economic growth?

Achieving such economic growth within a democratic framework is notable due to the complexities and challenges that democracies face.

What is the 'X Factor' that has allowed India to defy global economic trends?

The 'X Factor' includes policy decisions, infrastructure development, opening up to foreign investment, and a focus on services and digital economy.

How has the diversification of value chains benefited India?

India has benefited from the diversification of value chains as countries look to reduce their reliance on single manufacturing sources.

What is the current state of foreign direct investment in India?

India is becoming more open to foreign direct investment, which is contributing to its economic growth.

What is the role of India's digital economy in its growth?

The digital economy is growing stronger than traditional manufacturing, and India's digitally literate young population is a significant advantage.

What risks does the rising global debt pose to the developing world?

Rising debt levels, especially in developing countries, pose a risk as high interest rates due to inflationary pressure can lead to debt servicing becoming the largest budget cost.

What is Borge Bren's recommendation for India's economic policy moving forward?

Bren suggests that India should continue its reforms and invest revenues from growth into areas that increase its future competitiveness.

Outlines

00:00

🌍 India's Economic Resilience Amidst Global Challenges

The first paragraph discusses India's remarkable economic growth despite global conflicts and economic downturns. India is highlighted as the world's fastest-growing economy, with the IMF predicting it could become the third-largest economy by 2027. The conversation with Borge Bren, the president of the World Economic Forum, delves into how India has managed to defy global trends. Bren attributes India's success to its economic reforms, infrastructure development, and opening up to foreign direct investments. He also notes India's impressive progress in lifting people out of poverty and its potential to become a $10 trillion economy in the coming decade. Bren emphasizes the importance of India's digital economy and its digitally literate young population as key factors in its growth.

05:02

📈 Policy Prescriptions and Global Debt Concerns

The second paragraph focuses on policy recommendations for India and the risks posed by rising global debt levels. Bren suggests that India should continue its current policies, ensuring that revenues from economic growth are invested in areas that enhance future competitiveness. He also addresses concerns raised by global agencies like the IMF and the World Bank about unsustainable debt levels, particularly in developing countries. Bren points out the challenge of managing debt taken on at zero interest rates in a context of high inflation and interest rates, which now constitute a significant budget cost. He argues that funds should ideally be invested in education, health, and infrastructure rather than servicing debt.

Keywords

💡Global Economic Gloom

Global Economic Gloom refers to the prevailing negative outlook on the world economy due to various factors such as wars, conflicts, and economic downturns. In the transcript, it is mentioned as a backdrop against which India's economic performance stands out, highlighting the contrast between India's growth and the global economic situation.

💡IMF

The International Monetary Fund (IMF) is an international organization that aims to stabilize the global economy and foster international monetary cooperation. The transcript mentions the IMF's prediction that India could become the world's third-largest economy by 2027, underscoring India's economic potential and the IMF's role in global economic forecasting.

💡Geopolitical Recession

A Geopolitical Recession is a type of economic downturn influenced by political factors, such as conflicts and trade wars. The transcript discusses the possibility of a geopolitical recession as a result of ongoing conflicts, which could negatively impact global trade and economic growth.

💡Reforms

Reforms in the context of the transcript refer to changes in economic policies and structures aimed at improving a country's economic performance. India's reforms are highlighted as a key factor in its economic growth, including infrastructure development and opening up to foreign direct investment.

💡Foreign Direct Investment (FDI)

Foreign Direct Investment is an investment made by a firm or individual in one country into business interests located in another country. The transcript notes that India is becoming more open to FDI, which is contributing to its economic growth by attracting capital and business operations from abroad.

💡Digital Economy

The Digital Economy encompasses all economic activities that result from digital technologies, such as e-commerce and digital services. The transcript points out that India is experiencing strong growth in its digital economy, particularly in services, which is a significant driver of its overall economic expansion.

💡Digital Literacy

Digital Literacy refers to the ability to access, understand, and use information in various digital formats. The transcript mentions India's digitally literate population, especially among the youth, as an advantage that supports the growth of the digital economy.

💡Debt

Debt in an economic context refers to the money that is owed by individuals, corporations, or governments. The transcript discusses concerns over rising levels of debt, particularly in developing countries, which can pose a risk to global economic stability if it becomes unsustainable.

💡Austerity

Austerity refers to a government's policy of reducing its budget deficit through spending cuts, increased taxes, or a combination of both. The transcript suggests that implementing austerity measures during low growth could hinder economic recovery by reducing support for growth.

💡Infrastructure

Infrastructure encompasses the basic physical and organizational structures needed for the operation of a society or enterprise. The transcript highlights India's rapid infrastructure development, including new airports, trains, and roads, as a significant factor in its economic growth.

💡Value Chains

Value Chains are the full range of activities which are required to bring a product or service from conception, through the intermediate phases of production, delivery, to final consumption. The transcript mentions diversification of value chains as a trend where countries are seeking to reduce reliance on a single country for manufacturing, which India is benefiting from.

Highlights

India is the world's fastest-growing economy.

IMF predicts India could become the third-largest economy by 2027.

India's economic growth is notable despite global conflicts and economic downturns.

Borge Brende, president of the World Economic Forum, discusses global economic outlook.

Global economy expected to grow more than 3% despite fears of recession.

There's a global geopolitical recession but conflicts like Ukraine and Gaza have not severely impacted trade and growth.

India's economy is performing incredibly well, even relying on global situations.

India's trend growth was close to 4%, now a little over 3%.

Continued reforms could make India a 10 trillion USD economy in the coming decade.

India's growth has helped lift 400 million people out of extreme poverty.

India's economic success is significant as a democracy.

Infrastructure in India is rapidly changing with new airports, trains, and roads.

India's economy is opening up to foreign direct investments.

India benefits from diversification of value chains and 'friend-shoring'.

25% of Apple iPhones are now produced in India.

India's services and digital economy are growing stronger.

India has a digitally literate young population.

Digital ID in India is important for broader economic context.

Policy prescription for New Delhi is to continue current strategies and invest in competitiveness.

Global agencies like IMF and World Bank are concerned about rising debt levels.

Unsustainable debt poses a risk to the global economy due to high interest rates.

Debt was taken on at zero interest rates, now interest rates are at 4%.

Interest rates have become the largest budget cost in many developing countries.

Transcripts

meanwhile globally the focus is on

India's economic policies India's the

world's fastest growing economy the IMF

says it could become the third largest

economy by 2027 and this is despite two

Wars multiple conflicts and global

economic gloom and doom so the question

is how has India managed to remain the

bright spot how is it defying these

Trends what will be the impact of rising

Global debt and artificial intelligence

earlier today I spoke to Borge Bren the

president of the world economic Forum

here's an excerpt of that

conversation Mr Bren welcome to first

post and thank you for speaking with us

thank you for inviting me we living in a

world with two major conflicts uh two

major Wars rather and multiple other

conflicts and deepening divisions first

of all what impact do you see on the

global economy in the year

ahead so the global economy is is doing

much better than we expected so we were

afraid that we're going to be faced with

the recession uh this year and uh we do

now expect the global economy to uh then

uh grow more than 3% but we are what we

are faced with instead is kind of a

global geopolitical recession and we do

hope that those conflicts that you were

mentioning Ukraine Gaza conflict uh

doesn't uh then escalate in a way where

they will also have sever negative

impact on trade and growth how do you

think India is fairing in this larger

global environment and what is your

assessment of India's growth story and

trajectory so India is also an economy

that of course relies on uh other

countries and the global uh situation uh

but since growth is back even if it's

lower than Trend growth uh in the last

three decades uh Trend growth was close

to 4% now we are a little bit more uh

than 3% India is doing incredibly well I

have to say that India uh is the fastest

growing of the large economies uh in the

world if India continues with its

reforms I think India in the coming

decade can become a 10 trillion US

dollar economy and what does that mean

it means that India will be the third

largest economy in the world and it

means that uh more people get

opportunities for jobs and a better

livelihood we should not forget that

India has due to this growth that we

have also seen the last years

eradicated more than um eradicated

poverty at an impressive scale 400

million people has been lifted out of

extreme poverty this uh has only been

seen in China at that pace in the past

and India is a democracy so with all all

the compulsions or the trappings of a

democracy uh to be able to achieve this

is is interesting uh and this 10

trillion figure is something that you

have mentioned in the past as well

you've said that India is on track to

becoming A1 trillion doll economy in the

coming years what is The X Factor that

you see uh in the Indian economic

landscape why is it able to Buck the

global trend of slowdowns is it the

policy decision is it larger

geopolitical forces or is it a

combination of the

two all the about I would say uh the

reforms have been important we're seeing

that uh infrastructure is changing very

fast and in the hundreds of new airports

we also seeing uh trains and Roads we

are also uh seeing that uh the Indian uh

economy is opening up uh more open to

foreign direct Investments More Level

Playing Field of course course also

India has benefited from this

diversification uh of uh value chains uh

many countries say they cannot have just

uh 80 90% of products being manufactured

in one country and you also have this

so-called friend Shoring uh that uh

India is benefiting from especially I

think the largest economy in the world

the US also AR no um increasing

manufacturing uh coming uh from um India

just look at Apple there's not a lot of

Apple iPhones produced in India just a

few years ago and now is like 25% of

their uh production and I would also add

that um we're seeing stronger growth in

services and the digital economy than

the traditional manufacturing and India

is stronger on services and digital so

also the fact India has

quite digitally literate population

especially the young is working in its

interest and also of course this uh uh

digital ID uh was important in this uh

broader context so from a policy

perspective what would your prescription

for New Delhi be more of the

same uh more of the same I would also uh

make sure that uh the revenues that will

come from a growth of 8% uh are invested

in areas where it further increases

India's competitiveness in the future in

fact Global agencies like the IMF and

the World Bank have also been raising

the concerns over Rising levels of debt

especially in the developing world uh

what sort of risk do you think this

unsustainable debt uh poses uh to the

global economy the problem is that when

the growth is uh pretty low to go into

an a austerity situation now would also

not uh be a good thing because we still

have to support uh growth but the

interest rates are also High because uh

of the inflationary pressure uh that is

there a lot of this debt was taken uh

and committed in a situation where there

was Sero interest and when you know have

4% interest uh interest rates has now

become the

largest budget

cost in many developing countries and uh

this is very vome these money should

have been invested then in school

education and health and infrastructure

Mr Bor Bren thank you very much for

sharing your thoughts and insights with

us thank you so much for inviting me