Understanding The Impact of "Make in India" On India's Geopolitical Standing
India's economy cannot exist in isolation, and without formidable economic strength or geo-economic capability, India's geopolitical capacity will perish in days.
The economy of any nation is the backbone of its stability in the region and the world. So, the Economy has to be handled delicately keeping regional and world dynamics in mind.
The strength and efficiency of the Indian economy changed dramatically after 2014. Several factors contributed to and continue to contribute to the Indian economy's global emergence. It didn't happen overnight; it took nearly 8 years.
Why 2014 is essential? What factors have altered the outlook for the Indian economy and diplomacy?
1. 2014 is significant because it marked a shift in India's political landscape. That year, Prime Minister Narendra Modi was sworn in as the country's prime minister with a commanding majority. He formed its government without forming an alliance with other political parties, allowing him to make several independent decisions without being influenced by the views of others.
3. In that year also in September Indian government introduced its flagship program to build goods in India which is why the government introduced the "Make In India" program. To ensure the success of the "Make in India" program, the Indian government took the following steps.
2. He gave impeccable importance to improving the Indian economy. His first reform was to eliminate corruption from the Indian system, so he introduced "Notebandi" a reform under which he banned old 500 and 1000 rupee notes and introduced new 500 and 2000 rupee notes.
3. The GST (Goods and Services Tax) was then introduced by his Finance Minister to replace the old and rigid VAT taxation system. Other than GST reform the government slashed the corporate tax to invite foreign investors into the Indian economy.
4. Government also introduced PLI(Production Link Incentives) schemes to allure foreign manufacturing companies in India in different sectors: sectors like auto-component, automobiles, aviation, renewable energy, electronics, and others. Hon'ble Finance Minister, Smt Nirmala Sitharaman has announced an outlay of INR 1.97 Lakh Crores for the Production Linked Incentive (PLI) Schemes across 14 key sectors, to create national manufacturing champions and to create 60 lakh new jobs, and additional production of 30 lakh crore during next 5 years.
5. India is spending heavily on digital infrastructure. initiatives like Aadhar, Open Network For Digital Commerce(ONDC), UPI, Digi Locker, Bharat Net, Smart Cities, e-Health, and others.
What are the outcomes of the aforementioned reforms?
In 1991, India's economy opened its doors to the rest of the world. India opened its door under duress because the IMF required it, the requirement came because IMF provided a loan under which a condition was to open the economy for foreign investment.
Since then, the Indian economy has proliferated, but its momentum peaked in 2014. In 2013, the Indian economy had a volume of $1.857 trillion; during Modi's first year, it increased to $2.04 trillion, and it is now the world's fifth largest economy, with a massive volume of $3.53 trillion.
As India's economy grows manifold, it'll add $400 billion to the economic growth every year and its M-Cap will rise from $3.4 trillion to $11 trillion by 2032.
In 2014 it was nearly Rs 100 trillion. In a first, India's share of world market capitalization tops 4% with Rs 280.5 trillion. India rank 6th in M-Cap after the United States, China, Japan, Hong Kong, and the United Kingdom. the US is still the biggest contributor to global M-Cap at 44%, followed by China at 10.2%. Japan and Hong Kong's shares are 5.4% and 5% respectively.
India is aiming high right now. The Indian government set the goal of doubling its economy by 2022 in 2014, and it met that goal with pinpoint accuracy.
The Indian government is now attempting to achieve the goal of a $5 trillion economy by 2025, if not sooner. However, the IMF estimates that it will be possible only by 2029 because the Indian economy will grow at a 6.5% annual rate in 2023.
There are several experts predicting India's growth at a rate of 7-8% and according to their prediction, India might achieve the goal of the third-largest economy by 2035.
When India's economic growth results in power projection in the geopolitical arena then a legitimate question arises which is:
Why were those reforms required in today's environment?
The world is witnessing a series of heinous events that have resulted in the birth of a ruthless geopolitical environment. Everyone in this environment is ready to suck out anyone's blood if necessary. Also, hard bargaining has taken center stage in the case of survivability.
The world has been overwhelmed by the fallout of geopolitical conflict, which threatens to suffocate a recovery that has made its way through multiple waves of pandemics and wars. The world was already fighting the war against terrorism; the US moved out of Afghanistan and their clandestine policy created another war in Europe.
The escalation of geopolitical tension into war from late February 2022 delivered a blow to the global economy, battered as it had been through 2021 by the pandemic, supply chain, and logistic distribution, elevated inflation, and stress in financial market turbulence exacerbated by delivering paths of monetary policy regularisation.
Since then, the global macroeconomic outlook has been saddened by the slew of sanctions by the western powers on energy-rich Russia.
To tackle these matters India needed strategic thinking to shape its own economy
1. The Indian economy is standing tall because India's domestic savings are quite high in comparison to China's 18% and The US's 16%, India's share in Global domestic product stands at 7%.
2. The European war causes a "tectonic shift" in global geopolitics and economics. Key commodity shortages, flaws in the international financial architecture, and fears of de-globalization are all on the rise. Except for a few like-minded countries, every country is on the verge of becoming its own shell. However, India has maintained its relationships with all, as India is with the US in the same way that it is with Russia, and India is with Israel and Saudi Arabia in the same way that it is with Iran. India could do it because of its strong economic policy.
3. India's firm attachment to strategic autonomy and to preserving maximum freedom of action is levering India to do bargaining on its own term. India will always be guided by its own interests as it builds strategic ties with a range of countries.
4. India will never be going to be an ally of the US or anyone else, but the combination of strategic congruence and shedding the straight jacket of non-alignment has created a space of deep collaboration. India always maintained its independent stand on every matter since India's independence and India gained this confidence because of its struggle against the ferociously ruthless British Empire.
5. Above India's policy has helped India to stand against the paper tiger of Asia, China. India successfully defended its land against Chinese aggression after its 1961 defeat and India is giving the Chinese a befitting reply economically by sanctioning Chinese apps and digital goods in the Indian market.
6. India is also raising the finger to entwine twins the UK, and the US on the question of buying cheap Russian oil. They raised the issue because they wanted India to take the same steps as the way the US and the UK took but India defended its step on a war footing on buying Russian oil. Because without Russian oil Indian economy couldn't survive this geo-political and geo-economical mess.
"Make in India" gave the Indian economy tremendous strength and transferred its interest rate to the Indian geopolitical arena. India is on the way to achieving something extraordinary. India will achieve that by earning its rightful place in the world economy and geopolitics. India wants to be an economical power along with a geopolitical player that can lead and not simply balance. India will balance the world order by promoting a multipolar world rather than a unipolar or bipolar world. New Delhi is on the way to making this world truly peaceful and liveable.