Chancellor Olaf Scholz at his meeting with Prime Minister Narendra Modi.
(Photo: dpa)
Bangalore India’s rise to the top of the world is a foregone conclusion for Prime Minister Narendra Modi’s government. Industry Minister Piyush Goyal announced at the weekend that he was certain that India would be the world’s third largest economy in four or five years.
The prevailing opinion in New Delhi, which is just bursting with self-confidence, is that India is about to overtake Japan and Germany in terms of gross domestic product and will soon only be behind the USA and China.
With the country’s most recent claim to being the fastest-growing major economy and the promise of soon to be the world’s most populous country, India is getting more attention than it has in a long time. The West’s desire for an alternative to China is drawing additional attention to the country of 1.4 billion people.
Economic data are a first warning signal
But it would be fatal for India if the government were to rest on its laurels and trust that the country’s enormous size is sufficient for an economic breakthrough.
The significant slowdown in the economy in the last quarter is a warning signal that should be taken seriously. In competing locations such as Vietnam and Indonesia, the economy has recently grown much faster, at least for a short time.
India’s competitors are benefiting from their greater openness: while the Southeast Asian states are heavily involved in free trade agreements, India is counting on rising tariffs. Trade talks with the EU seem to be delayed again.
At the same time, insufficient infrastructure still means that logistics in the country are comparatively expensive – billions of euros in investments point in the right direction, but are not enough.
To ensure sustainable growth, India must also shift away from its focus on giant conglomerates like the ailing Adani empire – and instead establish a culture of competition in which it is irrelevant how well connected an entrepreneur is in politics. Prime Minister Modi has a chance to lead India’s rise. But he also has to prepare the country for it.
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