Weightage Almost 70 bps Higher than China: India’s Growing Economic Power
India, the land of diversity and rich culture, has been making waves in the global economy. The country has emerged as one of the fastest-growing major economies in the world, surpassing China in terms of weightage by almost 70 basis points (bps). This is a remarkable achievement for a country that was once known for its slow-paced development.
For those who are not familiar with the term, weightage is a measure of the relative importance of a country’s economy in a particular index. In this case, we are talking about the MSCI Emerging Markets Index, which is widely used by investors to track the performance of emerging market economies. India’s weightage in this index has increased from 8.1% to 8.8%, while China’s weightage has declined from 33.6% to 33.1%.
This significant shift in weightage is a reflection of India’s growing economic power. The country has been consistently outperforming other emerging markets in terms of economic growth. In the financial year 2018-19, India’s GDP growth rate was 6.8%, while China’s was 6.6%. This trend is expected to continue in the coming years, with India’s GDP growth projected to be around 7% in 2019-20, compared to China’s projected growth of 6.2%.
So, what is driving India’s economic growth? The answer lies in the country’s strong fundamentals and the government’s pro-growth policies. India has a young and dynamic workforce, which is driving the growth of various industries. The government’s initiatives such as Make in India, Digital India, and Skill India have further boosted the country’s economic growth.
The Indian government has also taken several measures to improve the ease of doing business in the country. In the World Bank’s Ease of Doing Business Index, India’s ranking has improved from 142 in 2014 to 77 in 2019. This has made it easier for both domestic and foreign companies to do business in India, leading to an increase in investments.
Another factor contributing to India’s economic growth is the ongoing reforms in the country’s financial sector. The introduction of the Goods and Services Tax (GST) has unified the Indian market, making it easier for businesses to operate across different states. The Insolvency and Bankruptcy Code has also made it easier to resolve cases of insolvency, improving the overall business climate in the country.
India’s strong economic growth has also been supported by its growing consumer market. With a population of over 1.3 billion, the country offers a huge market for companies to tap into. The rise of the middle class in India has led to an increase in consumer spending, which is expected to reach $3.6 trillion by 2020. This presents a huge opportunity for businesses to expand their operations and boost their revenues.
The rise in India’s weightage in the MSCI Emerging Markets Index is also a result of the country’s stable political environment. The Indian government has been able to maintain a stable macroeconomic environment, which has boosted investor confidence. The country’s inflation rate has been consistently under control, and the fiscal deficit has also been brought down in recent years.
India’s growing economic power has not gone unnoticed by the global community. The country has been attracting a significant amount of foreign investment, with total FDI inflow reaching $64.37 billion in 2018-19. This is a clear indication of the confidence that investors have in India’s economy.
The rise in India’s weightage in the MSCI Emerging Markets Index is a testament to the country’s economic potential. It is a clear indication that India is on the path to becoming a major global economic power. This is a significant achievement for a country that was once known for its slow-paced development and has faced several challenges in the past.
However, the journey towards becoming a developed nation is far from over. India still faces several challenges such as poverty, unemployment, and infrastructure development. The government is aware of these challenges and is taking steps to address them. The recent budget presented by the government has laid out a roadmap for achieving the goal of becoming a $5 trillion economy by 2024-25.
In conclusion, India’s weightage in the MSCI Emerging Markets Index being almost 70 bps higher than China is a reflection of the country
