Amid concerns over the global economy's recent lack of stamina, India has emerged like Rahul "the Wall" Dravid to stabilise the batting line.
In 2015, global growth slowed to 2.4 per cent and, for 2016, the World Bank has predicted a modest pick-up to 2.9 per cent. Against this backdrop, the Reserve Bank of India has reaffirmed its forecast that India's GDP would grow 7.4 per cent in 2015/16. It has also marked down its 2016/17 forecast to a still-respectable 7.6 per cent. We at the World Bank have made similar forecasts, suggesting India will grow 4.5 to 5 percentage points faster than the global economy!
This doesn't mean that the challenging global conditions will not impact India. In the short term, the game will undoubtedly be a difficult one. But we would like to focus on the longer term. The changes in the global economy can be positive provided India focuses on two key areas - boosting the competitiveness of its manufacturing and services sectors, and leveraging women's talent.
The sluggish international growth does not come as a surprise. In 2015, advanced economies mostly performed in line with expectations. The deceleration in the Chinese economy, on the other hand, has been more substantial than projected. What does this mean for India and its ability to sustain growth in the coming years?
In the short run, slower growth in China is associated with excess global capacity. For India, excess capacity in commodities is good news, while excess capacity in manufacturing helps explain why trade and private investment have fallen short.
Beyond the short term, the rebalancing of China's economy will open up big opportunities for India. Consumption growth in China remains strong, with the potential to create significant demand for Indian goods and services. Prospects for domestic demand in India are possibly even better than in China, and this, coupled with China's shrinking workforce and slower pace of investments, creates an opportunity for India to fill the gap.
India has recently given much attention to attracting investments. The success of its series of initiatives - Make in India, Skill India and Start-up India - will depend on the country's ability to increase its competitiveness. Importantly, 'competitiveness' doesn't only mean improving the country's standing in the 'Doing Business' indicators. While a better regulatory environment is important, it will be equally important to improve transport and communications infrastructure; ensure reliable and clean electricity; and enable the financial sector to finance investments. Also, as the World Bank's latest India Development Update highlights, implementing the national Goods and Services Tax is likely to lead to a leap in India's competitiveness.
Most importantly, the role that women play in boosting growth is often overlooked. Researchers David Cuberes and Marc Teigner estimate that India could boost its per capita income by 33 per cent if it closes the gender gap in economic participation. These gains would come from two sources - about two-thirds from closing the gap in labour market participation and the remaining from eliminating barriers to entrepreneurship.
According to the 2015 Female Entrepreneurship Index, India ranks 70 out of 77 countries surveyed for conditions that foster women's entrepreneurship, suggesting ample room for improvement. Getting more women into the labour force requires investment in girls' education, better child-care options, and attention to women's safety in large urban areas. As our colleagues Urmila Chatterjee, Rinku Murgai and Martin Rama argue in a recent paper, Indian cities face a critical jobs deficit that affects women disproportionately. More flexible and part-time jobs need to be created to match women's needs - and a big part of the solution is to have more women creating those jobs.
To seize the opportunity to grow faster than the rest of the world, India will need to continue its efforts to boost competitiveness and leverage the talent of its women.
This opinion piece was originally published in Business Today on 13th March, 2016.
