Global tariff turmoil: Way ahead for Indian economy

EACH MAJOR CRISIS has been a crucible for transformation in India's economic journey.

- Harsh Pati Singhania

Every time the Indian economy faced a challenge, it emerged stronger. During the Balance of Payments (BoP) crisis in 1991 when India had foreign exchange reserves to cover only three weeks of imports, it had to pledge gold to secure emergency loans and accepted IMF conditions for structural reforms. This led to the birth of the modern Indian economy, as trade and industry were liberalised followed by opening up to foreign investment and privatisation of state-owned enterprises.

Then a decade later, we had the 'dot-com bubble' (Y2K), when global tech markets crashed, seriously affecting investor sentiment. This was the trigger for the IT boom when India's response was to double down on its emerging IT sector. This led to the rise of Infosys, Wipro, TCS, HCLTech as global players. IT exports surged, creating millions of jobs and India emerged as a global outsourcing hub.

The global financial crisis of 2008 following the collapse of Lehman Brothers and global credit freeze was another trigger for a positive change for Indian economy.

In the immediate aftermath, India's GDP growth plunged by a half, the rupee depreciated by almost 20% and the stock market crashed by 60%. The government's fiscal stimulus (I had a ringside view of the developments as being the FICCI president at that time, this was our major policy prescription), with a major focus on infrastructure spending.