By Bhim D. Asdhir
April 23 (IANS): India's meteoric rise to global prominence is inevitable. Perhaps, US President Barack Obama, writing in Time Magazine on April 16, puts India's and Prime Minister Narendra Modi's rise to prominence best: "Today, he's the leader of the world's largest democracy, and his life story - from poverty to prime minister - reflects the dynamism and potential of India's rise."
True enough, both Modi's and India's rise to prominence on the global scene has been remarkable. In less than a year since becoming prime minister in May 2014, Modi has put India on the path to becoming a global powerhouse. And Modi has made it to Time's list of the Top 100 Most Influential People.
Christine Lagarde, the managing director of the International Monetary Fund, in an address at Lady Shri Ram College in New Delhi on March 16, highlighted India's rise, saying: "Just as many countries around the world are grappling with low growth, India has been marching in the opposite direction. This year already, India's growth rate is expected to exceed that of China, and by 2030, it is will overtake China as the most populous country in the world."
In fact, the IMF has upgraded India's growth forecast twice in the past year, most recently in April, from 7.2 percent in 2014 to 7.5 percent in calendar year 2015. The global watchdog said growth will come from policy reforms, a consequent pickup in investment and lower oil prices. The government, on the other hand, believes that GDP growth will accelerate by eight percent to 8.5 percent in fiscal 2015-16 that began on April 1.
In fact, some analysts are forecasting double-digit growth rates in the near future, fuelled by government reforms which are proving to be a huge driver among foreign investors who are pumping record levels of money into India.
Last year, foreign private and institutional investments into India reached record levels, with a dramatic increase expected in 2015. Investors from several major developed countries, including the US, China, Japan, France, Germany and Canada have so far committed massive investments in India, largely due to Modi's influence.
During his recent visit to Canada, the first by an Indian prime minister since 1973, the two countries completed memoranda of understanding in a range of areas, including civil aviation, rail regulation, education and skills development, space cooperation, and projects focussed on maternal, newborn and child health and social security.
Several commercial agreements between Canadian and Indian companies, valued at some $1.6 billion, were also announced in sectors such as aerospace and defence, education, energy, mining, infrastructure, sustainable technologies, and information and communications technology.
One of the more important commercial agreements involves the Saskatchewan-based Cameco, which will supply India with over seven million pounds of uranium over the next five years as part of the Canada-India Nuclear Cooperation Agreement. Modi had earlier signed agreements with France to build nuclear reactors, aimed at fulfilling his plans to make India energy sufficient.
As India takes off, it represents more than an exciting investment opportunity for Canadian investors. Prime Minister Stephen Harper sees 1.2 million Indian voters in Canada who love Modi, which could be a big boost for him in the next elections. Incidentally, Harper was actively involved in cultural events in Toronto and Vancouver held in honour of Modi - which were attended by "sellout" crowds of Indo-Canadians.
Modi's visit to Canada will also increase awareness among investors about the opportunities available in India. While India is probably the most over-weighted country among foreign institutional investors, Canadians are now beginning to warm up to investing in the country. Last year, the Excel India Fund was the best performing mutual in Canada out of more than 4,000 such funds, according to Morningstar Canada. This indicates that investors need to place greater credence in India as an investment opportunity.
India has become a priority in Canada's Global Markets Action Plan, which seeks to increase the number of Canadian companies exporting abroad. During Modi's visit, Harper stated that "it is exciting to see the commercial deals being signed between Canadian and Indian firms" that "will generate jobs and economic growth in both countries".
He also indicated that he and Modi are "busy working to advance bilateral agreements that will further increase two-way trade and investment flows" aimed at leveraging the enormous untapped trade potential between the two countries.
Evidently, the relationship between Canada and India will only grow stronger as India takes off. Modi recognizes that the government cannot develop India on its own and is getting the private sector more involved. He has also relaxed foreign institutional and foreign direct investment restrictions and opened the doors to foreign investors, which will drive the equity markets higher to the benefit of investors.
For now, India can only keep rising, benefitting Canadian investors.