- 5th Largest Economy Surpassing UK within 10 Years
By Mwansa Chalwe Snr
In the last decade, one of the world’s remarkable economic success stories is the economic transformation of India. While the United States and China were engaged in all manner of rivalry, India under Prime Minister Narendra Modi was quietly emerging as a global economic superpower. There are many lessons – political, economical, and geopolitical/ economical – for Zambia to learn from India on 21st Century State craft strategies.
The most notable development for India’s progress was its surpassing the UK – the former colonial master – as the World’s fifth largest economy in terms Gross Domestic Product (GDP), due to the rapid expansion of its economy. This was a significant milestone.
Transformational Economic Reforms
When Modi took over in 2014, he introduced significant structural reforms, policy innovations, and a focus on both social and economic infrastructure, which have collectively changed the way India is perceived by the outside World and how it perceives itself.
In the economic arena, Modi’s economic strategy was the implementation of reforms whose objective was to liberalize the economy with a view to boosting economic growth. In 2017, for example, he introduced the Goods and Services Tax (GST) which was a landmark reform because it unified India’s vast market by replacing multiple state and central taxes with a single, streamlined tax regime. This reform did not only simplify the tax structure, but also enhanced compliance, and resulted in increased tax revenues.
Modi also introduced the Digital India initiative. This has been pivotal in transforming India into a digitally empowered society. The initiative enhanced digital infrastructure, improved digital literacy, and delivered government services digitally. And one of the most notable successes of this initiative is the rapid expansion of the internet user base in India, which now stands at over 700 million. The Unified Payments Interface (UPI), launched in 2016, for example, has revolutionized digital payments in India and made financial transactions seamless, secure, and instantaneous thus contributing to the growth of a digital economy.
Infrastructure development was another core area of focus for the Modi administration. The ambitious and iconic Bharatmala and Sagarmala projects, improved road and port connectivity across the country. The development of smart cities, expansion of metro rail networks, and the construction of affordable housing enhanced the quality of urban life.
Why are American Companies relocating from China to India ?
In the last ten years, India has also benefited from Multinational Corporations adopting a “China plus one” strategy as well as its “Make in India” Campaign. This strategy seeks for alternative manufacturing bases to reduce dependence on a single country, especially China.
In 2019, the US-India Strategic and Partnership Forum’s (USISPF) reported that about 200 US companies were planning to set up manufacturing bases in India by moving them from China.
“ The US-India Strategic and Partnership Forum (USISPF) President Mukesh Aghi said that companies are talking to them about how to set up an alternative to China by investing in India,” The Economic Times Reported, then.
The reasons for the relocation are several and varied, but include the following: the need to diversify the supply chains especially after COVID-19 disrupted global supply chains; the US-China trade war which has led companies to explore alternative manufacturing locations; the perceived heightened control over businesses, arbitrary enforcement of laws and increased surveillance by Chinese Authorities which has created uncertainty, and lastly, India’s demographic advantages of a large market, with a massive youth and skilled population.
And since then, several major US companies have relocated or expanded operations in India. These include Apple (manufacturing iPhones),Google (manufacturing Pixels),Amazon (expanding e-commerce and cloud services),Cisco (setting up a manufacturing hub),Intel (investing in research and development), Tesla (setting up an R&D center), Dell(expanding manufacturing and R&D),Johnson & Johnson (setting up a manufacturing facility).
Social Reforms and Inclusion Initiatives
Indian’s economic growth measures under Modi’s leadership were complemented by many initiatives that were focused on social inclusion. Schemes like Jan Dhan Yojana were aimed at bringing the unbanked population into the formal financial system, resulting in the opening of over 400 million bank accounts.
In 2018, the Ayushman Bharat scheme was launched to provide health insurance to over 500 million people, making it one of the world’s largest government-funded healthcare programs. This initiative seeks to reduce the financial burden of healthcare on the poor and improve access to quality medical services.
The Pradhan Mantri Awas Yojana (PMAY) provided affordable housing to millions of urban and rural poor, while initiatives like the Ujjwala Yojana have provided clean cooking fuel to over 80 million households, improving health outcomes, and reducing environmental impact.
The scale of the impact India’s social initiatives is mind boggling to an objective observer. The Indian External Affairs Minister, S. Jaishankar put the scale of India’s social initiatives in context in his book : Why Bharat Matters.
“The Jan Dhan Initiative is like banking the US and Mexico at one goal; the Saubhagya scheme is like electrifying Russia; the UJJwala is equivalent to changing cooking fuel for the whole of Germany; and the Awas Yojana is like housing all of Japan. Examples could be cited in other areas like water, health care coverage and farm support.
“Indians must be conscious that the World has a lot riding on our decisions. Those who wish us well will endeavour to cooperate. Others who see our rise less favourably, will obstruct, if not do worse. It is vital that we do not open ourselves to the external shaping of our prospects.
“India’s economic progress contributes to a rebalancing and multipolarity that is still unfolding. India matters because it not only symbolises good governance; its digital public infrastructure has a large relevance to the World. Developing countries see it as experiences that are directly applicable to them especially when they are executed on such a large canvas,” External Affairs Minister S. Jaishankar, wrote in his book.
Lessons for Zambia from India
The first lesson for Zambia from India is that in the 21st first Century, you need seasoned foreign policy specialists and local strategists to navigate the complex geopolitical landscape, because the World is already multipolar. Countries, especially developing nations need to diversify and balance relationships among the World economic powers, and not depend on one.
India is certainly an emerging global economic power house that has fallen below the radar of most countries. But smart and strategic countries have already taken notice and taking advantage. India will be unique as a world power because it has unequal diaspora population which gives it immense competitive advantage in the international arena.
In order to put India’s demographic and diaspora advantage in context, consider the fact that India has one sixth of the Word’s population. The enormity of India’s human potential has been underrated thus far. There are currently 32 Million Indian nationals and Persons of Indian origin (PIOs) living and working abroad.
The US is home to 4.5 million, many of whom are important to technology and innovation. Twice that number, approximately 9 million, resides in the Gulf and keeps their economies going. Commonwealth countries like the UK, Canada, South Africa and Australia account for another 5 million plus. Indians do indeed matter because they are truly global.
Suffice to say that economic development is complex, and there’s no one-size-fits-all solution. However, Zambia can emulate India on a few common-sense initiatives and programs, that have proved to be universary effective. For example, Zambia needs to simplify its taxation system especially for micro enterprises as well as make drastic regulatory reforms by reducing the number of regulations and licences like India did.
Zambia must create a more business-friendly environment to promote local investors as well as attract foreign investment. This is not rocket science. Zambia needs to also invest heavily in infrastructure like roads, railways, dams, energy, internet to improve connectivity and trade.
Apart from replicating the above initiatives, Zambia needs to upscale its economic relationship with India by increasing trade and investment with India in critical minerals (Zambia’s strength) and aim to attract more Indian investors to Zambia in pharmaceuticals and Information Communication Technology (ICT) and agriculture ( India’s strengths).
Zambia needs to start depending more on its local expertise rather than foreigners for advice and solutions with more emphasis on promoting local companies like India did. The overarching lesson from India is that over dependency on foreigners for advice, trade, production and investment, never transformed any country throughout history.
Conclusion
The success of the Indian economy being transformed within a period of ten years by a visionary leader in Narendra Modi is truly admirable, and is similar to what current Brazilian President Lula De Silva did in his first two terms from 2003 to 2012, when he transformed the Brazilian economy and reduced poverty by 89%.
The two leaders provide perfect examples which African Leaders should emulate. Both leaders laser focused on the economic transformation of their countries, and largely ignored the politicking, which is normally a distraction to most leaders, and prevents them from keeping the eye on the prize.
The success of Narendra Modi in India and Lula in Brazil, has clearly demonstrated that in a democratic society, when you laser focus on transforming the economy and take care of the poor, whilst ignoring opposition noise, politics will take care of themselves. And voters will inevitably reward you. Mondi is on the verge of a third term in office next month – June,2024, just like Lula has a third term in Brazil.
The writer is a Chartered Accountant and Economic commentator. He is the Author of “China-West Battleground in Africa: Debt Ridden Zambia”, available on Amazon.com Contact : pmch[email protected]
