Prime Minister Modi’s currency experimentation has not stopped India’s vibrant economy, which is the world’s 4th fastest growing economy in the world thus far in 2017.
That’s according to the World Bank’s latest edition of Global Economic Prospects. For 2017, India’s economy is expected to advance 7.2 percent. That’s slightly above the country’s long-term growth. GDP Annual Growth Rate in India averaged 6.12 percent from 1951 until 2017, reaching an all time high of 11.40 percent in the first quarter of 2010 and a record low of -5.20 percent in the fourth quarter of 1979, according to Tradingeconomics.com.
The Indian economy has benefited from a stable macroeconomic environment of low inflation and interest rates, which has helped shake off a temporary slow-down in consumer spending and a drop in investment that followed the demonetization program back in November 2016 -- which took 86 percent of the country’s currency out of circulation.
India’s economy has also benefited from ongoing market reforms that have improved competitiveness. For 2016-17, India scored 4.52 points out of 7, according to Global Competitiveness Report published by the World Economic Forum, slightly above its ten year average of 4.33 points. That helped the country climb to rise to the position as the 39th most competitive nation in the world -- out of 138 countries ranked in the report.
The Competitiveness Rank in India averaged 52.73 from 2007 until 2017, reaching an all time high of 71.00 in 2015 and a record low of 39.00 in 2017.
Improved competitiveness, in turn, has helped narrow the country’s current account deficit to 0.70 percent of the country's Gross Domestic Product in 2016. Current Account to GDP in India averaged -1.40 percent from 1980 until 2016, reaching an all time high of 2.28 percent in 2003 and a record low of -4.80 percent in 2012, according to Tradingeconomics.com.
Financial markets have taken notice. The iShares S&P India have gained 20.76 percent over the last twelve months, though those figures are still lagging behind the markets of neighboring Pakistan.