Three years ago India was the weakling of the emerging markets clan, politically stagnant and struggling to grow -- but as gloom engulfs other developing economies, the subcontinent is enjoying a moment in the sun. Brazil and Russia lie deep in recession and South Africa is teetering on the brink after demand for raw materials collapsed, while alarm bells have sounded over fears the China juggernaut may be faltering. Enter India, once dubbed the Broken BRIC, as the core group is known, now poised to become the fastest-growing G20 economy, expanding at a respectable seven percent, with its finances nourished by cheap oil.
It is not all rosy -- while low-cost oil and a new way of calculating growth have added shine to India's GDP figures, its exports remain poor and shares on the Bombay Stock Exchange languish five percent below a year ago. Economists say underlying growth remains fragile, and question whether the re-calculated figures that show India's growth rate has caught up with China's can be trusted. But as turmoil convulsed global markets this summer, wiping trillions of dollars off world exchanges and leading investors to flee emerging economies, India has escaped comparatively unscathed.
At the peak of the boom in 2010, Brazil, the one-time South American superstar grew 7.5 percent; economists now expect it to remain in recession in 2016, as political paralysis compounds its woes. Fellow junk-rated Russia, an oil exporter which lost big when prices halved, faces biting sanctions over the Ukraine crisis, while the number of Russians living in poverty has soared to 21.7 million, or roughly 15 percent of its total population, statistics agency Rosstat said. In South Africa, one of China's biggest suppliers of minerals, one in four people is unemployed and GDP unexpectedly shrank 1.3 percent in the second quarter. Sales of iron ore have tanked, leading mining companies to announce huge layoffs. Adding to the pain is a looming Federal Reserve interest rate rise, which will make riskier emerging markets less attractive compared with the dollar.
Next to its fractious emerging market cousins, politically stable India looks positively glowing, named by the IMF as one of the few "bright spots" in the world economy. Low commodity prices are a gift: while cheap crude has pummelled exporters, India, which imports 80 percent of its oil needs, won the lottery. The ensuing cash windfall has helped the government balance its books and made it less reliant on foreign loans.
Yet old problems persist -- Prime Minister Narendra Modi's promised reforms have stalled, with a land acquisition bill abandoned and a key sales tax delayed indefinitely. India escaped much of the recent global turmoil because it exports relatively little -- meaning it does not make enough goods people want to buy, isolating it from the wider economy. Labour and investment laws remain agonisingly complex, hindering growth, while outdated infrastructure is badly in need of funds. And while in New Delhi politicians trumpet a growth rate that now rivals China's, economists warn India is still a chronic underperformer. Its economy is five times smaller than that of China, which although not bounding like before still contributes more than a third of global growth.
