https://www.wsj.com/articles/a-growing-india-is-good-for-the-us-modi-state-visit-8-percent-reform-65f1047d?mod=opinion_lead_pos6
When India’s Prime Minister Narendra Modi visits the U.S. this week, Americans should pay careful attention to his vision for 8% growth. Both countries would benefit greatly from faster growth.
India has entered the 25-year period leading to the 100th anniversary of its independence with a growth plan. Called Amrit Kaal, which roughly translates to “Golden Era,” it is Mr. Modi’s rallying cry and blueprint for India to reach 8% growth and a much higher median income. Faster growth in India would help the U.S. by allowing new opportunities for trade and investment, less dependence on China, and better balance for the bipolar world economy.
Eight percent sounds out of reach in a world of weak growth, but India has grown by 6% or more in recent years and is building from a relatively low base ($2,200 per capita). When offered sound policies and the tolerance inherent in rules-based government, people from anywhere in the world can achieve fast compound growth rates. China’s economy grew 10% a year throughout its 1993-2012 era of currency stability, market and price liberalization, and tolerance for growing businesses.
India has shown that it can hold down external indebtedness and that the rupee can be relatively stable. It should build on that. Key reforms would shrink spending and bureaucracy and allow increased investment and jobs in medium-size companies. India’s job creation is shaped like a barbell, with startups and small businesses on one side facing daunting barriers to expansion from overgrown government, regulation and high taxes. On the other side are the government and a few big companies as massive employers. While Mr. Modi’s budget calls for more government investment, it is critical that investment shift to the private sector, particularly so small businesses can grow. Reforms offer big potential upside in three particular areas.