In another milestone for the Indian Economy, the Indian Stock Market has overtaken Germany to become the seventh largest in the world. According to a report by Bloomberg, India surpassed the equity market of Europe’s largest economy, Germany for the first time in seven years. After the UK leaves the European Union in March, France remains the only country from the bloc in the list of the seven big markets.
One of the reasons behind India’s surge in the equity market is its reliance on the domestic demands which enabled it to avoid the meltdown in the emerging markets. Another reason is the trade war between the US and China as well as the Federal Reserve’s decision to slow down overheated economic growth.
At the time when the MSCI Emerging Markets Index is set to decline by 17 percent, India’s benchmark S&P BSE Sensex Index is up by 5 percent after seesawing through the year amid currency crisis and oil-price volatility.
The acts of focusing on entrepreneurship and promoting indigenization have also put India ahead in the race. It is projected that India’s economy will grow at 7.3 percent in the year 2019, which is almost 4.5 times than that of the German economic growth of 1.6 percent.
In another instance, Brookings Institute, the leading think tank of the United States has stated that global institutions have underestimated India’s achievements in reducing extreme poverty. In a report titled as ‘Rethinking global poverty reduction in 2019’, the institution emphasized on India’s contribution in reducing global poverty. The report was authored by Kristofer Hamel and Martin Hofer of World Data Lab and Homi Kharas of Brookings Institution. “The soon-to-be-largest country in the world has been reducing extreme poverty fast and the world may have underestimated India’s achievements,” said the report.
Recently, the American and European stock markets tumbled after Jerome Powell led the Federal Open Market Committee (FOMC) decided to raise interest rates for the fourth time this year. The Asian markets were also severely affected by the hawkish stance of the central bank of United States. The Fed raised the interest rate by 25 basis points from 2.25 to 2.5 percent in yesterday’s meeting. The investors across the world reacted strongly on the Fed rate hike but Indian market was unexpectedly calm. The Indian market has been relatively resilient in the last few months and the fear gauge has not raised much. This is suggestive of strong investor sentiment on Indian economy.
Modi government has always been on the target of opposition for its economic reforms whether it is demonetization or the implementation of Goods and Services Tax (GST). But the leap in India’s stock market in the global rankings tell a different story altogether. India has been growing at the pace of 7-8 percent over the last two decades in the post-economic reforms period. With reports like the one published by Bloomberg, several other studies have also shown that economic reforms under the Modi government have helped the country to pull millions of people out of poverty.