Korean Media: India's Economy with No Investment!

On October 7, the South Korean media outlet "Korea Economic Daily" published an article stating that the Indian government led by Prime Minister Narendra Modi is recently increasing cash aid and subsidy policies. Previously expanding infrastructure investment is now declining. After the ruling Bharatiya Janata Party (BJP) failed to secure a majority in last year's elections, it suddenly changed its policy direction. This is in sharp contrast to the large-scale investments in roads, railways, and telecom projects from 2019 to last year.

Capital investment by Indian companies is also gradually declining. A survey by the Indian Statistics Office shows that private sector capital investment is expected to fall by 25% this fiscal year compared to the previous fiscal year. This is the result of the combined impact of global uncertainty and slowing domestic demand. Investment contraction is particularly severe in the manufacturing and infrastructure sectors. Only 49% of private Indian companies reported making capital investments in the previous fiscal year, while more than 40% of the surveyed companies did not announce their plans for this year.

Foreign direct investment (FDI) has also significantly declined. Last year, net FDI inflows into India accounted for only 0.7% of GDP, the lowest level in 15 years. This decline was largely due to the tariff policies of the U.S. government under Donald Trump's second term. By encouraging companies to establish production bases in the United States, FDI inflows into India have slowed down.

Although there are some examples of foreign investment, they are exceptions. Apple recently announced plans to produce all iPhone 17 models in India and export them to the U.S. market. AI company OpenAI previously announced plans to establish a large data center in India. However, these are still in the discussion stage, and actual FDI inflows remain limited.

The decline in investment has had a sustained negative impact on GDP growth. South Korea achieved an annual economic growth rate of 15% in the 1980s, and China maintained high growth of around 10% to 15% in the early 2000s. However, India's growth rate is limited to between 5% and 7%, as the Indian government and businesses have failed to create a structure that can increase employment, expand the middle class, raise income and consumption levels.

Original: www.toutiao.com/article/1845313117813760/

Statement: The article represents the views of the author.