Prime Minister Narendra Modi warned politicians and business leaders from around the world on Tuesday that protectionism was posing a threat to international trade.
Modi was addressing the opening session of the World Economic Forum, held annually in the Swiss resort town of Davos. He spoke in Hindi.
‘Instead of globalization, the power of protectionism is putting its head up,’ Modi told his audience, according to Mint. ‘Their wish is not only to save themselves from globalization, but to change the natural flow of globalization.’
Modi’s words highlighted growing concerns about America’s inward turn under President Donald Trump. Last year, Chinese President Xi Jinping had also made a speech at Davos defending globalisation. (Xi did not attend this year.)
Unsurprisingly, Modi also made a pitch for India. ‘An inclusive, progressive, India will continue to be the good news in an otherwise gloomy world,’ he said.
Modi stressed India was open for business. ‘We have made it so easy to invest in India, manufacture in India and work in India. We have decided to uproot licence and permit Raj,’ he said. ‘We are replacing red tape with red carpet’.
As evidence Modi pointed to the Goods and Services Tax rolled out in July and claimed that 1,400 archaic laws had been scrapped.
The IMF on Monday provided some ballast for Modi’s pitch. Its World Economic Outlook for 2018 projected Indian GDP growth at 7.4% in calendar year 2018, and 7.8% in 2019.
Figures from India’s Central Statistics Office (CSO) however, indicate more modest growth in the near term. In the 2016-17 fiscal year, India’s economy grew at 7.1%, according to the CSO. And its forecast for growth in 2017-18 is 6.5%. But growth in the six months to September 30 was only 6%, meaning the economy will have to grow at 7% in the October-March period to match that forecast.
It’s worth noting that 2017-18 projection of 6.5% is less than even the RBI’s lowered estimate of 6.7% for 2017-18.
There’s little unambiguously good news for India’s economy. Despite a much-publicised recent report suggesting strong jobs creation, the reality may be more mixed. And rising oil prices will leave the country with much higher import bill this fiscal year. (Brent Crude has been hovering at around $70 a barrel this week.) Indeed, if the IMF’s outlook of 3.9% growth for the world economy in 2018 and 2019 turns out to be accurate, oil prices are unlikely to drop drastically for a while.
Finally, with India heading for a general election next year, it would be unrealistic to expect serious reform measures this year.