BY KIRAN SOOD – MEDILL NEWS SERVICE
As the U.S. economy slowly recovers from a recession and gradually puts the pieces of its economy back together, across the Atlantic, India’s economy is poised to take off after the recent re-election of economist Manmohan Singh as Prime Minister.
Much is at stake for the future of the nation’s economy. India’s newly re-elected Prime Minister faces the tasks of ending government corruption, elevating the economy, and helping the poor. However, economists have reason to believe that now is the ideal time to invest in India, as its Sensex soared 17 percent in one day after last week’s election.
“We shall have to prioritize for the economy to be brought back on the rails,” said former Foreign Minister Pranab Mukherjee, who is thought to be the favored candidate for finance minister.
Investors are optimistic that the desire for change is greater than ever now. When Singh was finance minister, his policies allowed direct foreign investment while eliminating other constraints. Since he started applying his ideals in the early 1990s, India’s GDP has increased 400 percent and millions of middle-class jobs have been created.
Analysts see little question that political stability will positively impact India’s sovereign rating, which is currently at a BBB – long-term credit rating, the lowest investment grade level.
Investors also agree that the young workforce presents a demographic advantage over nations like China and Japan. About 30 percent of the nation’s 1.2 billion people are younger than 15. If these young people are put to work in good jobs by the new government, this would provide invaluable human capital for the nation.
The combination of these factors is leading some economists to think twice before issuing declarations that China is further ahead in the race to be Asia’s next superpower.