Elisha Pulivarti/Washington DC
Agriculture and manufacturing, that too SMEs (small and medium enterprises) have saved India from an economic crisi
s. At a time when many economists and experts thought that India is going Sri Lankan way, collapse of economy and debt repayment crisis, a miraculous hand almost rescued it. That miracle is nothing but much neglected agriculture and manufacturing sectors. Manufacturing sector is led by SMEs.
Of course, India is not Sri Lanka, to be swept away by a financial crisis, as a result of debt default. But, many of our economy’s characteristics are similar to that of Island nation. India is a big economy, fifth largest in the world, just behind the US, China, Japan and Germany. Very recently, India pushed the UK behind to come to this spot. Experts predict, in another 15 years, India will become third largest economy in the world, just behind America and China.
But, presently, India is saved by two key sectors – agriculture and SMEs (manufacturing). Normal or above the normal rainfall for the last 6 years has improved the agriculture sector. Of course, the Centre and several states have come to the rescue of agriculture which has been neglected by our policymakers for decades. Still ever increasing farm output and food grains controlled inflation from touching dangerous levels, below 9 per cent.
RBI rate hikes:
Reserve Bank of India (RBI) once again hiked the interest rates, by increasing Repo rate to 5.90 per cent (at which it lends to the banks). Still banks in the country are optimistic of sustained demand, thanks to the robust rural economy. If food inflation is under limits, RBI may take it easy and down the interest rates by March 2023. And things will be fine by the end of that year or 2024.
Similarly, manufacturing sector too is doing better than what we imagined, after the close to three year long pandemic. If big industries are still struggling to come to terms, it is SMEs that have performed well. India’s GST for September, 2022 is close to Rs 1.47 lakh crore, a sort of record in recent months. The PLI (productivity linked incentives) scheme is showing results.
Though big industries appear to be showing the results, it is SMEs that are actually contributing to the economy. SMEs are there in every sector – right from defence to aerospace and pharmaceuticals to agriculture technology firms. I am happy that our US India SME Council is playing a role in this economic buoyancy of India. Both the US and India should sustain this growth momentum in the coming years too.
(Writer is founder CEO of US India SME Council and Excel India Washington DC bureau chief. This article is a part of a series of write ups on US India business opportunities).
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