India

India misses an opportunity

  India has indicated that it will no longer participate in the preparatory work for the establishment of the Asian Free Trade Area (RCEP) and that it will not join at a later date. But even without India, RCEP will be the largest free trade area in the world, accounting for almost a third of the global economy and almost a third of the world’s population. At present, India’s current account balance is relatively stable overall and the slight decline of around 2% in gross domestic product gives little cause for concern. However, if we look only at trade in goods, i.e. the traditional trade balance, there is currently an enormous Indian trade deficit with China, which has almost quadrupled in the last ten years to around 58 billion US dollars – with total bilateral trade of around 95 billion US dollars. The concern that cheap imported goods will continue…

India’s upcoming elections: can the BJP defend its absolute majority?

In the upcoming parliamentary elections in India in April-May, Prime Minister Modi’s ruling Hindu-nationalist BJP party has to defend its absolute majority of seats in the lower house of the Indian parliament. We do not expect this to be an easy task as many of the country’s population groups have failed to genuinely participate in the successes of Modi’s reform policy. In rural areas, unemployment and underemployment are very high and so is discontent with the government. The Gandhi clan’s secular Congress Party has caught up significantly in voter favour. Last December it even succeeded in reversing the voting structure in three core Hindu states and in stealing the BJP’s majority in national parliaments there. The Modi government’s net economic impact has actually been very positive. Its „Make in India“ industrial policy has already attracted many foreign direct investors into the country. Reforms have enabled India to considerably improve its…