Now India is reaping the benefits. With its current GDP touching $1.85 trillion, a fourfold increase in two decades, and robust foreign exchange reserves at $292 billion, India has catapulted itself into the top 10 economies in the world by size.
Recently, the nearly 10 percent GDP growth it had attained a couple of years ago has decreased due to the slowdown in the global economy.
Meanwhile, domestic factors — high inflation over the last two years, widened fiscal deficit (6 percent of GDP in 2012), current account deficit (4.2 percent of GDP in 2012), and lower business confidence — have added to the slowdown. (More:India Declares, 'We're Back in Business')
Just a little while ago, the rating agency Standard and Poor’s put India on a rating watch with negative outlook to be reviewed. If it does not address its pressing economic issues, the country stands to lose its BBB- investment grade.
Has India trapped itself in another economic quagmire? Perhaps not. But for some time now, economic analysts have said that India needs another set of reforms that would enable it to face challenges and emerge stronger as a global economic superpower.
Last month the call for reforms was finally answered when the Prime Minister of India, Dr. Manmohan Singh, said to his cabinet colleagues, “If we have to go down, we have to go down fighting.”
The coalition government, otherwise criticized for its policy paralysis, announced a slew of measures beginning with increased diesel prices, permitting and enhancing Foreign Direct Investment in sectors such as retailing (which could potentially pave the way for companies like Wal-mart to set up shop in India), aviation, and broadcasting.
These forward-looking measures could not only open up opportunities for companies and investors, but could also emerge as a game-changer in modernizing India’s trade, deepening its transportation network, augmenting its employment potential, and uplifting its standard of living. (More:Investing in India? Here's How)
India is already known for its Information Technology (IT) outsourcing industry. But now, Indian pharmaceutical companies are supplying generic drugs to the United States and other developing markets. The rising affluence of its younger population, coupled with increasing literacy, has thrown open a wide domestic market for products and services. The current set of reforms coupled with the ones expected in the areas of power generation, banking, infrastructure, and taxation, all lead to easing the business process to attract further attention of investors.