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Miracles don’t happen without Fundamentals…Just take a look at India

Last month, Narendra Modi’s BJP Party delivered a landslide victory in Gujarat: the biggest on record, with the Party notching up an impressive 156 seats out of 182 (an 80% majority), and obviously, that bodes well for Mr Modi retaining power in next year’s General Election. Such an outcome would have been unthinkable in the days when Jawaharlal Nehru and Indira Gandhi strode the world stage. True it is that, since 1995, Gujarat has been held by the BJP in seven straight elections, but December’s results were a real game changer. The once dominant Congress Party won just two seats (its worst result in the State for three decades), and the supposed natural Party of government continues to flounder across the Subcontinent.

Unsurprisingly, therefore, BJP’s Chief Minister in Gujarat,  Bhupendra Patel, wasn’t mincing his words after the results came in: “This is a victory of the unwavering faith of the people of Gujarat in BJP’s good governance”…and how right he was. Just think back a few years, and you’ll understand exactly what he meant…


India’s Economic Miracle

When Narendra Modi was first elected to power in 2014, domestic GDP grew by an astonishing 7.41% over his first year in office: a rise of more than 1% year on year…and with the single obvious exception of the COVID years, Indian GDP had continued to grow ever since (sitting comfortably at 8.95% by the end of 2021, and staying steady at 8.7% into December last year, when, of course, the bunting was being broken out in Gujarat). In 2013, one year before he took office, inflation on the Subcontinent was running at a record high of 12.7%, but by 2017, under his stewardship, it fell back to a record low of 1.54% ( And before 2014, interest rates were soaring at 8.25%: but within two years, the Modi magic had reigned that back to 6%. The list goes on…since 2018, and including the pandemic years, Indian salaries have risen by an average of 9% year on year (, added to which the Subcontinent is now building more affordable homes than ever before.


To any informed economist (let alone the man on the Mumbai Omnibus), these are all astonishing, virtually unprecedented numbers: exponential growth in real-term salaries is supposed to increase inflation, not reduce it, and high inflation rates are supposed to lead to higher interest rates…but not in India: quite the reverse. It’s a track record Jeremy Hunt would do anything to replicate in the former mother country, especially given the UK’s imminent prospect of stagflation, coupled (according to the IMF’s forecast released on Tuesday: with a negative growth profile, likely to put the UK at the bottom of the growth table for all advanced economies worldwide (and that’s including sanctions starved Russia).


It’s the Fundamentals…

So what lies at the heart of India’s economic miracle? Why is it repeatedly confounding informed financial analysis?


Well, the answer couldn’t be more simple: it’s because the country’s success rests on its key fundamentals. The fastest growing population on the planet: increasingly wealthy, increasingly urbanised, and with individual aspirations rising like never before. Massive infrastructure spending adds to the mix (at a time when, over in Whitehall, Jeremy Hunt seems to be toying with the idea of running HS2 short into a tangle of London suburbs because his coffers have run dry ( not to mention a level of global ambition (for India, not the UK) that’s leaving most other countries cold on the blocks.


Those, then, are the stark and unmistakable realities that any average Indian can understand, and that’s why the results in Gujarat are signalling strongly another Modi victory in 2024. So don’t forget you heard it here (almost) first.


Executive Overview

Last month’s State Election results in Gujarat shouldn’t come as a surprise to anyone…Prime Minister Modi’s Government is reaping the rewards of an economic miracle.

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Suchit Punnose

Suchit Punnose / About Author

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