Policy continuity is key if India wants to see strong economic growth in the next 5 years, Nomura says

Optimism in India’s Growth

India’s growth prospects remain positive, but maintaining policy continuity is crucial for sustained growth in the next five years, according to Rob Subbaraman, Nomura’s chief economist and head of global markets research Asia ex-Japan. He emphasized the importance of the Sustainable Development Goals (SDGs) in driving India’s growth trajectory.

The Modi Administration’s Performance

Subbaraman praised the Modi administration, stating that they have done an excellent job in their two terms in office since 2014. With the ongoing elections, it is widely expected that Modi will secure a strong mandate for a third term.

India’s Growth Outlook

Nomura projects that India’s economy could grow by an average of 7% in the next five years if current growth-driving policies are maintained. This projection surpasses Nomura’s growth outlook for China, Singapore, and South Korea in the same period.

India as the Fastest Growing Asian Economy

Nomura predicts that India will be the fastest growing Asian economy this decade, especially with China’s economy slowing down. The bank emphasizes the importance of policy continuity and macroeconomic stability in sustaining India’s growth.

Investment as a Key Driver

Subbaraman highlights the increasing investment in India as a key factor driving growth. Investment as a share of GDP is rising, and favorable conditions are aligning for private capital expenditure, including foreign direct investments (FDI).

Challenges and Risks

While Nomura is optimistic about India’s growth, Sonal Varma, the firm’s chief economist for India and Asia (ex-Japan), warns of headwinds and the need for a stronger economy to boost employment. The current growth recovery is strong but uneven, and there are potential risks from global spillovers.

Medium-term Growth Drivers

India aims to become a global manufacturing powerhouse, and investments in the sector are expected to drive economic growth. The government has allocated significant capital expenditure for fiscal year 2025 to boost manufacturing capabilities. However, India still lags behind other Asian countries in terms of overall exports.

The Role of the Financial Services Sector

Nomura highlights the growing importance of India’s financial services sector, which contributes approximately 7% to GDP. The sector has undergone significant improvements in bank supervision and requirements, leading to a more stable banking system.

SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 8: Decent Work and Economic Growth

The article discusses India’s projected economic growth and the importance of policy continuity for sustained growth. This aligns with SDG 8, which focuses on promoting sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.

SDG 9: Industry, Innovation, and Infrastructure

The article mentions India’s plans to become a global manufacturing powerhouse and the investments being made in the manufacturing sector. This relates to SDG 9, which aims to build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.

SDG 10: Reduced Inequalities

The article does not directly address the issue of reduced inequalities. However, it mentions the importance of policies that promote equality in order to ensure a stronger economy and boost employment. This aligns with SDG 10, which focuses on reducing inequalities within and among countries.

SDG 17: Partnerships for the Goals

The article does not directly address the issue of partnerships for the goals. However, it mentions the need for policy continuity and a focus on macroeconomic stability, which can be achieved through domestic resource mobilization and international support. This relates to SDG 17, which emphasizes the importance of global partnerships for sustainable development.

2. What specific targets under those SDGs can be identified based on the article’s content?

Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries

The article mentions Nomura’s projection that India’s economy could grow by an average of 7% in the next five years. This aligns with Target 8.1, which aims to sustain economic growth, particularly in least developed countries, at a rate of at least 7% per annum.

Target 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries

The article discusses India’s ambitious plans to be a global manufacturing powerhouse and the investments being made in the manufacturing sector. This aligns with Target 9.2, which aims to promote inclusive and sustainable industrialization and increase the industry’s share of employment and GDP.

Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality

The article mentions the importance of policies that promote equality in order to ensure a stronger economy and boost employment. This aligns with Target 10.4, which focuses on adopting policies that promote greater equality, including fiscal, wage, and social protection policies.

Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection

The article does not directly address this target. However, it mentions the need for policy continuity and a focus on macroeconomic stability, which can be achieved through domestic resource mobilization and international support. This relates to Target 17.1, which aims to strengthen domestic resource mobilization and improve domestic capacity for tax and revenue collection.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article does not mention any specific indicators that can be used to measure progress towards the identified targets. However, indicators such as GDP growth rate, share of industry in employment and GDP, and measures of equality and social protection could be relevant for measuring progress towards the targets.

SDGs, Targets, and Indicators

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Fuente: cnbc.com

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