Amid much global gloom, India has a bright economic future, as Kumar Mangalam Birla recently said. But we can’t assume that success will somehow descend upon us on its own

Economists can only forecast growth. Industrialists go ahead and achieve it. So, when Aditya Birla Group chairman Kumar Mangalam Birla recently said India’s growth prospects were good and that his company had lined up $5 billion to plough into the aluminium business alone, one must take note. As he pointed out, all major forecasters expect our economy to expand by over 7% this year. This is impressive in a pre-post-pandemic world suffering from economic anaemia, given the lingering effects of covid. Birla took into account our reasonably robust macroeconomic conditions, foreign exchange reserves that can finance nine months of imports, significant infrastructure plans lined up by the Centre, new initiatives in manufacturing, such as incentive schemes for a raft of modern sectors, and recent cheerful indicators of commercial activity.

While Birla is right to sense buoyancy ahead, we must not take growth for granted. There is a certain sense of inevitability about India’s rise in some circles, of our ascent to the world’s top league of economies in terms of size. Yet, to succeed, a country must forge its own destiny, actively working for it, not wait for success to descend upon it. The International Monetary Fund has forecast a slowdown for the world economy in the wake of the Ukraine war and resultant spike in global commodity prices (and uncertainty). Inflation has forced central banks to raise rates (save China’s). Hikes in the Federal funds rate and a flight to safety of capital from around the world have pushed up the US dollar, putting pressure on the import bills of energy importers like India and causing local inflation. As the world slows, our exports will be hurt. So how can we still hope to defy the global gloom?

We have been buying discounted oil from Russia in disregard of the West’s sanctions. This offers us some respite. A chief component of India’s exports is infotech and IT-related services, which are fairly insulated from moderate slowdowns. A major migration to the cloud and other digital outlays present software firms with opportunities. The rollout of 5G telecom networks will widen this scope. As the slowdown will force global cost-cutting, India’s edge could shine through. Meanwhile, price slumps that follow declines in demand could cheapen inputs for Indian manufacturers. With capacity utilization levels having risen this year, expansions could restart. Infra projects are likely to act as a big spur for that. As India urbanizes, thousands of additional square kilometres of urban space would need to be built, provided with power lines, telecom towers, sewerage, piped drinking water, and much else. New towns would have to be filled with homes, schools and hospitals, restaurants, shops and offices. All these would need to be painted, furnished, polished. And India’s demographic profile favours fast growth for the foreseeable future. An ageing world has created enough financial savings to provide the money needed to build the infrastructure emerging markets need, and we have proven to be an attractive destination for capital. What we also need to focus on is social cohesion and political stability. Strife could result should a large minority find that it cannot live with dignity along with the majority. Then, there are policy wrinkles to sort out, such as those that strain our power sector, strip education of quality and make contract enforcement difficult. India can become an economic superpower, but not if we assume it will be thrust upon us.

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