Till about 300 years ago, India accounted for more than a quarter of the world’s GDP. This share began falling following the advent of British power over the subcontinent. In the past few years, though, India’s economy has seen a revival and will continue to do so, a report called “India: The Giant Awakens” by Aberdeen Asset Management says.
One of the largest funds in the world, Aberdeen is bullish about India whose economic growth, according to its report, is coming a full circle.
“India’s rise may seem unprecedented but it’s actually reclaiming a position it held for centuries. Throughout much of the last 2,000 years, India has been either the largest or the second-largest economy in the world,” Kenneth Akintewe, senior investment manager, fixed income, Aberdeen Asia, writes in the report.
India’s 17th century Mughal emperor Akbar earned an annual revenue of some £17.5 million, according to Aberdeen. At that time India’s share of the global GDP had been relatively stable at 25% for around 200 years. This began falling during colonisation and the slide continued till the late 1970s. Things got better after liberalisation in 1991 when the country opened up the economy. Since then, India’s share has steadily risen.
So, what’s Aberdeen betting on now to predict good times for India? The answer: Narendra Modi.
The fund says Modi has ”has torn up the rulebook and started afresh.”
While the report indicates that there’s still a lot of work to do—on infrastructure and manufacturing, for instance—it believes Modi’s actions are bearing fruit. “A common perception in India is that the reform process is stalling and Modi’s popularity is under pressure. This is frequently aired in the general media but it mischaracterises the reality,” the report says.
Government initiatives such as Make in India have been showing results. For instance, foreign direct investment in 2015 grew 24% over the previous year. Other reforms that Aberdeen highlighted include the goods and services tax bill, faster environmental clearances, and the smart cities project. It also said that the number of stalled projects has dropped.