India must stay on course with its economic reforms

While disruptive, these corrective measures could drive the country’s growth for the next 30 years

India’s time to shine in the global economy is now, but to make that happen, the country will need to revitalise its economic reforms. If those reforms are successful, they could result in a 30year economic boom. Last week, the International Monetary Fund (IMF) said that thanks in part to India’s current economic reforms — which include the implementation of a goods and services tax, combined with a relatively young work force — the country can be a “long-run source of global growth”. India now contributes 15 per cent to global growth, making it one of the fastest-growing economies in the world.

The key goals for India now will be to change the business environment, attract more foreign investments and continue to create jobs. This will not be easy and will require changes that many in the country may find uncomfortable. The IMF specifically highlights the need to change numerous outdated and restrictive laws that prevent firms from expanding and points out the need for greater inclusion of women in the work force. The country also needs to let more foreign companies enter. The overwhelming response to the launch of an IKEA store in Hyderabad shows there is strong demand for foreign products. To see this sector grow further, India must cut down on the red tape and lower tariffs.

But the biggest challenge will be navigating the growing trade war. The IMF points specifically to India’s growing exports, which could reach 13.2 per cent this year, the highest rate of growth since 2011-12. India has already started down the path to a better economy. Now, it needs to finish the job of reforming.