In geopolitical terms, we would sell ourselves short in not observing that the tectonic power struggle of our times is not just China v USA. It’s actually a three-cornered contest of China v USA v Russia. In this contest, India-Russia historical ties cannot be dismissed – they shape, for instance, the question of Afghanistan and security in the region. And while pundits theorise about the institutional political future of China as it liberalises and opens itself up to global order, India, for us in Australia, is an answered question as a vibrant democracy.
On track to become the world’s third largest economy, by 2035 its share of global GDP could be on par with the US. It will also be the world’s most populous nation, with a forecast 1.6 billion people and a rapidly growing and highly educated middle class. Growth in 2018 is expected to outstrip China’s and run at over 7% a year for the next three years.
In short, India looms large in a prosperous future for Australia.
In just the last two years, its story has been signposted by the introduction of a GST, demonetisation, the creation of Startup India, Digital India, liberalisation of trade and tariffs, reforms such as a massive increase in the populations’ access to banking, and now sweeping health reforms. It’s in this endeavour to drive growth and address inequality that Australia can, and should, partner with India – working together, learning from each other, and sharing in a common future.
Moreover, the Indian economy is poised to take advantage of its (relatively) young population to drive the third wave of Asian growth. First, it was Japan, then China. Now India, with its growing working age population, will drive growth in this Asian century. The country will account for more than half of the increase in Asia’s workforce in the coming decade, and the consequences for businesses are vast.
So the big levers of economic potential—the ‘3Ps’ of population, participation, and productivity—are all set to surge, and India is increasingly benefiting from both structural reforms and greater stability.
And the pay-off? As India continues its march of urbanisation and industrialisation, calls for Australian resources and energy, services know-how, and capital investments will be high. And as India’s middle class begins to balloon, demand for Australia’s economic and social services – tourism, education, health, agriculture – will be an absolute.
Exports to India could rise to around $45 billion, and investment in the country rise 10 fold, to over $100 billion.
But to realise this huge opportunity, there’s much to do.
India is an awakening giant, and its rise as an economic and geopolitical superpower is about to be felt in earnest.
If Australia gets things right, the consequences for our continuing prosperity (something we should never take for granted) – as well as India’s – will be considerable.
Pradeep is the Lead Partner for Deloitte Access Economics. He has had a long and successful career in public policy, with deep expertise in economics and proven leadership experience. Pradeep has been a senior bureaucrat, working at the highest levels of public policy, across three jurisdictions in Australia. Pradeep’s experience includes: Director of Policy in the Prime Minister’s office, Secretary of the Department of Health and Human Services in Victoria, CEO of LaunchVic – a company established by the Victorian Government to promote start-ups and entrepreneurship – and Associate Director General of the Department of Premier and Cabinet in Queensland. He holds a PhD in Economics and Bachelor of Economics (Hons) from the University of Queensland.