Modi's Pragmatic Reforms Steer India's Growth Amid Global Trade Storms

In a recent newsletter introducing a series of articles in its latest issue, The Economist magazine mentioned Prime Minister Modi's deft handling of adversities, coercion, and constraints with pragmatism, determination, and resilience.

It reminded how under his stewardship, relations with China have thawed, with curbs on investment lifted; trade deals have been sealed, where "a big one with the EU is expected later this month". While US tariffs remain in place, and although these are hurting some exporters, the strategy has been to demonstrate that India can cope and "will not be bounced into anything it regrets", the magazine newsletter observed, adding that this has thus reduced United States President Donald Trump's leverage.

Meanwhile, India's Prime Minister has used the pressure from abroad to push through reform at home. He has simplified taxes, deregulated the nuclear industry and is opening up the electricity sector to private investment and foreign competition, it added.

"Most importantly, he has overhauled India's employment laws to help manufacturers scale up and compete. All this is framed as urgent work in a more hostile world. Indians strongly approve -- indeed, the landmark labour deregulation faced surprisingly muted resistance," noted the introductory message.

The path has not been smooth; much of his second term was wasted, it recounted, "having been spooked by a wave of protests against his agricultural reforms", the write-up reminded. "Still, if they (European leaders) can take one lesson from India, it is that a silver lining can be found in the midst of a Trump-storm," the newsletter reflected.

In one of the articles, India is referred to as the "Rising giant", attributing "The ascent of India's economy" as benefiting "from a slice of luck, a commitment to economic reform and a shove from Donald Trump".

New Delhi faced Washington's 25 per cent "reciprocal tariff" combined with an equal additional levy "as punishment for buying heavily discounted Russian crude oil".

Meanwhile, private-sector investment is sluggish; foreign investors have been selling out of India's highly valued stockmarket. Moreover, the rupee slid to a record low against the dollar at the end of last year. "Yet a combination of three things -- luck, macroeconomic policy and structural reform -- is reason for optimism, in both the short and long term," opined the article.

It noted in the year to the third quarter, "GDP grew by 8.2 per cent, much faster than expected"; and the government raised its forecast for the 2026 fiscal year (ending March 31) "from a range of 6.3-6.8 per cent to 7.4 per cent", which, it assumed "will feed into the budget on February 1". Thus, it pointed out, that while the world's most populous country has remained peripheral to the global economy, it is now showing "remarkable promise".

When his party "was humbled in 2024", with the BJP losing its status as the single-largest party with over a halfway majority in the Lok Sabha and having to depend on allies for support, there were doubts.

The article recounted how there were expectations in certain quarters that the re-election of Donald Trump, with whom PM Modi "once got on famously, would strengthen his hand". Instead, it rendered the US President "whacked most Indian exports with tariffs, which now add up to 50 per cent". Challenges remain, but "Just as well, then, that India seems to have decided that the risks from trying to transform its economy are less than those of being left behind".

- IANS