BackNarendra Modi at AIIB: With $2.8 trillion size, Indian economy is the 7th largest in the world
Indian economy is the third largest in terms of purchasing power parity, says PM Narendra Modi said at the third annual general meeting of AIIB in Mumbai
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Mumbai: Prime Minister Narendra Modi on Tuesday said that with a size of $2.8 trillion, India is the seventh-largest global economy.
The Indian economy is the third-largest in terms of purchasing power parity, Modi said at the opening ceremony of the third annual general meeting of the board of governors of Asian Infrastructure Investment Bank (AIIB) in Mumbai on Tuesday.
“In the fourth quarter of 2017, we grew at 7.7%. In 2018, we are projected to grow at 7.4%," Modi said.
This comes in the backdrop of Modi vouching to take the Indian economy to double-digit growth with the government facing re-election next year. Interim finance minister Piyush Goyal has said that the target can be achieved by the fourth quarter (January-March) of the current fiscal year.
The Indian economy had expanded by 7.1% in 2016-17, 8.2% in 2015-16 and 7.4% in 2014-15.
The Indian economy accelerated to a seven-quarter high of 7.7% in the March quarter, signalling that it is tiding over the disruptions—triggered by demonetization of high-value currencies and rollout of the goods and services tax (GST).
Modi also signalled ruling out tax cuts to control fuel prices by the government and said, “Despite rising oil prices, inflation is within the mandated range. The government is firmly committed to the path of fiscal consolidation."
With fuel prices reaching a record high in India, there has been a demand for an excise duty cut on petrol and diesel. The government has so far refused to roll back its decision to link domestic and international fuel prices and said that it was working toward a “long-term solution".
Union minister Arun Jaitley recently said that the demands of huge cuts in fuel prices by opposition parties could lead India into a debt trap.
“The external sector remains robust. Our foreign exchange reserves of more than $400 billion provide us enough cushion. Global confidence in India’s economy is rising. Total foreign direct investment (FDI) flows have increased steadily—more than $222 billion have been received in the last four years," Modi said on Tuesday. He also urged the Beijing-based AIIB to increase financing from $4 billion now to $40 billion by 2020 and $100 billion by 2025.
While China has a 31.02% stake in AIIB, with 8.72% stake, India is the second-largest stakeholder. Aimed at improving ‘social and economic outcomes in Asia and beyond’, AIIB started operations in January 2016. With 87 countries as members, it has an authorized capital base of $100 billion.
Interestingly, Jin Liqun, president, AIIB pitched China’s ‘One Belt One Road’ (OBOR) initiative aimed at connecting around 60 countries across Asia, Africa and Europe at the opening ceremony.
“In addition to our formal partnerships, I would note that our members are involved in a wide range of regional infrastructure and trade arrangements. The Belt and Road Initiative is one such arrangement. It is an invitation by China to other sovereign nations and multilateral partners to cooperate and collaborate in line with the principles of broad consultation, joint contribution and shared benefits," Jin Liqun said.
India has been critical of China developing the China-Pakistan Economic Corridor (CPEC), part OBOR infrastructure initiative cutting through Gilgit and Baltistan areas of Pakistan-occupied Kashmir (PoK). OBOR, first unveiled by Chinese president Xi Jinping in 2013, aims to put billions of dollars in infrastructure projects, including railways, ports and power grids across Asia, Africa and Europe.
“Other multilateral arrangements we will work with include the Greater Mekong Subregion programme, the Central Asia Regional Economic Cooperation programme, the South Asia Sub-Regional Economic Cooperation programme and the Asia-Africa Growth Corridor. For the countries involved, it makes sense to coordinate their AIIB investments with these other programmes," Liqun added.
India’s position on OBOR was further cemented earlier this month, when Modi underlined the need for a respect for sovereignty and transparency in connectivity projects among the members of the Shanghai Cooperation Organization (SCO) at the 18th summit in Qingdao.
Liqun also lauded China’s efforts to implement crucial reforms, economic restructuring, social policies and income redistribution.
The meeting’s venue assumes importance given that India is AIIB’s second-largest shareholder and the largest recipient of AIIB’s funds. Of the $4.39 billion invested by the Beijing headquartered bank, six Indian projects accounted for $1.21 billion of that funding.
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