India becomes Fastest Growing Economy

India is not only growing faster than China, but also every other major market in the world. India is on pace to outgrow China’s 7.5 percent growth rate in 2015 and beyond.

India is not only growing faster than China, but also every other major market in the world. India is on pace to outgrow China’s 7.5 percent growth rate in 2015 and beyond.

India threw many analysts off by becoming the world’s fast growing economy, especially on the heels of some economic turbulence in recent years. Emerging markets like India have been suffering along with other economies, but the country is making headway in a variety of ways. India is in a better position because the rupee has performed well against the dollar, and price declines for some goods and services are helping consumers and businesses.

In addition, India has benefited from low oil prices, reducing high inflation and easing the cost burden on consumers.  Falling oil prices give citizens extra money in their pockets to contribute to economic growth, and the drop helps farmers and other industries that rely on energy. Further, the government cut diesel subsidies to reduce the subsidy budget.

Even though India is an emerging market, meaning its citizens are in transition up the socio-economic ladder, tens of millions of people in the country still live in poverty.  On a relative basis, they face hardship from the high cost of food and other necessities.

Solid Growth Projections

India also expects to grow anywhere from eight to 10 percent in the next 15 years. In dollar terms, India may grow at a rate of 11 to 12 percent. If such a projection pans out, India will turn from a $2 trillion economy to an $8 trillion one.

Rising energy demand will result from such a fast growth rate so there will be a need to get more electricity in Indian households. Currently, one-fourth of the Indian population lacks electricity.

Indian Financial Markets

Marketwise, investors may be bullish on Indian stocks on a multi-year basis, mostly due to government reforms. Investors are also encouraged by the country’s young worker populace, and experts state that India’s growth period has not reached its peak. Corporate earnings in India have gained this year as well.

India’s Improvement

Some analysts attribute India’s prior woes to the previous left-leaning government. Regardless of the political bent, it is difficult to deny that the policies of the current right-wing government are having a positive effect on the economy. Prime Minister Narendra Modi ushered in drastic reforms that improved the economy. Frist, he removed the cap from foreign investment, allowing such industries as defense and insurance to grow. In addition, central bank head Raghuram Rajan was instrumental in reducing the nation’s foreign debt, which is another factor that entices more investors to conduct business with India.

India has more issues to work out, but the country is in a better position going forward.