No.6 – November 2009 1
Eclairages Emergents
Economic Research Department
Eclairages Emergents
Aperiodic publication - No. 6
November 2009
The increasing economic and political influence of the BRIC countries has attracted considerable at-
tention over the past five years. India is no exception. Key reforms implemented in the 1990s have
pushed the economy on an exceptional growth path and enabled important progress in the social
area. The dynamic IT sector which has lifted India amongst the world’s leaders in this sector has also
put the country in the spotlight. As regards to future prospects, they remain positive. With the sec-
ond world’s largest population and a rapid economic growth, India is expected to overtake the Japa-
nese economy in PPP terms by 2025 to become the world’s third largest economy. Its attractiveness
in terms of market potential is also huge due to a rising middle class. However many obstacles lie
ahead and further reforms will be crucial to overcome them. On top of the list comes the need for a
wider coverage of social safety nets, an improvement in government practices, a reduction in income
inequality and poverty and infrastructure improvements. Moreover, the public finance burden must
be reduced in order to provide an enhanced leeway to implement vital structural reforms. In the
short term, India’s economy is proving resilient in the face of the global economic crisis and will per-
form rather well compared to other Asian countries. These good growth prospects will be further
boosted by the strong mandate of the Congress-led coalition which has injected some optimism in
the economy. Nonetheless it is worth noting that the country will still head towards a marked slow
down after having enjoyed five years of high economic growth.
India: Faring its way in a challenging environment
Eclairages Emergents from Cynthia KALASOPATAN
cynthia.kalasopatan@credit-agricole-sa.fr
Resilience of the Indian economy in FY 2009/10
1
Box 1: Outlook boosted