The ‘I’ in BRICS implies hope for India's growth potential
India was the flavour at this year’s edition of the World Economic Forum, says JLL India’s head Anuj Puri in his JLL blog.
“In the play of global expectations unfolding on a stage staggering with actors who may just be guessing at their lines, India has a very complicated role to play,” he says.
The tone was set on Day 1 of the meet, with the Indian Finance Minister Arun Jaitley saying India’s GDP could potentially grow to 9%, provided the country gets a facilitating global economic environment to operate.
“A clear takeaway is that we are the fastest growing amongst the emerging markets – as a consequence, the ‘I’ in BRICS now signifies hope for the world,” he writes.
There was general affirmation that there is no risk of a repeat of ‘2008’; however, there is no ignoring the economic and financial challenges currently in the global ecosystem. There was a lot of rumbling about the inherent risk from China, and the repercussions of a hard landing.
The US market is still a mixed bag – given the general impression that it is back on a growth curve, he says. Then there are geopolitical risks arising from the Middle East which threaten to derail.
On the brighter side, lower oil and commodity prices has been a boon, so to say. “The current low oil prices are good for the seven billion people that our blue planet supports,” he writes.
The IMF estimates that the world economy’s GDP growth is 3.1% in 2015, 3.4% in 2016 and 3.6% in 2017. It’s growth nevertheless.
Among the others, India is the flavour of today and will likely see 7.5% growth, provided its politicians roll out ground-altering reforms at the expected pace, he adds. Russia and Brazil have lost out in the popularity sweepstakes because of their domestic issues.
Puri says there is a consensus that India’s exciting entrepreneurial ecosystem is expanding, leading to more entrepreneurs and tech start-ups, but that India will miss the bus again if it does not harness this entrepreneurial energy.
He dispels rumours of the Great Indian Start-up Boom beginning to lose some of its decibels, saying it is normal churn, even citing Professor Nouriel Roubini of New York University.
Roubini said that if there was any place in the world where he would prefer to gestate a start-up, India comes a close second after Silicon Valley.
Puri also addresses the larger question about the implications of a fourth industrial revolution on emerging markets? Will it bridge the gap between developed and developing countries? Will India’s demographics be able to adapt to increased automation, and how will its manufacturing evolve?
He cites Colin Dyer’s words that technology will make strong and established businesses even stronger, as we embrace the change. We are just at the cusp of the ‘E-evolution’, he says.
“I hope it’s only for the better, but we hold a massive and unpredictable tiger by its digital tail,” Puri writes.
In the Indian context, all its industries, including the semi-opaque real estate, will mature into more transparent ones with cutting-edge technology.
In imagining India as the world’s next growth engine, Puri draws parallels with the Gauls, immortalized by Goscinny and Uderzo in the Asterix comics.
“The village druid Getafix had a magic potion which could instantly infuse superhuman strength. The magic potion India needs today is the Goods and Services Tax (GST) Bill. Will this magic fix be served up in the upcoming Union Budget? I certainly hope so.”
Also, the change in the constitution of the Upper House will help the government to implement other important bills too, such as the Real Estate (Regulation and Development) Bill and the Land Acquisition, Rehabilitation and Resettlement Act.
Puri says the overall mood was upbeat, but it could have more to do with “humankind’s undying pursuit of optimism”.
The first three weeks of 2016 have been a pretty miserable start: the US is slowing down, and the chase to the White House this year may slow them down even more; stock markets are currently overreacting to China, even though we may be headed for a softer landing than expected. But China will need to transition from industrial to services and exports to consumption if it is to reclaim its former glory.
The European Union remains a major area of concern, and JLL’s Christian Ulbrich leaves with a few more furrows to his brow, he writes. The EU definitely has its hands full with the challenges of Brexit and the refugee crisis. George Osborne’s remark that ‘UK wants to be in EU but not run by it’ may be a sign of things to come.
India, however, remains a bright spot, according to the IMF. It has achieved escape velocity from the BRICs bloc and is off on its own growth trajectory, he concludes.