Workers at a wholesale market in New Delhi. Credit...Rebecca Conway for The New York Times
India Is Chasing China’s Economy. But Something Is Holding It Back.
Long-term investment in India by businesses is stagnant, and foreign money is falling, even as the government is driving growth with infrastructure spending.
Workers at a wholesale market in New Delhi.Credit...Rebecca Conway for The New York Times
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By Alex Travelli
Reporting from New Delhi
Jan. 2, 2024
India’s economy is booming. Stock prices are through the roof, among the best performing in the world. The government’s investment in airports, bridges and roads, and clean-energy infrastructure is visible almost everywhere. India’s total output, or gross domestic product, is expected to increase 6 percent this year — faster than the United States or China.
But there’s a hitch: Investment by Indian companies is not keeping pace. The money that companies put into the future of their businesses, for things like new machines and factories, is stagnant. As a fraction of India’s economy, it is shrinking. And while money is flying into India’s stock markets, long-term investment from overseas has been declining.
Green and red lights are flashing at the same time. At some point soon, the government will need to reduce its extraordinary spending, which could weigh on the economy if private sector money doesn’t pick up.
Foreign direct investment in India
Note: Rolling 12-month total
Source: Reserve Bank of India
By The New York Times
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Alex Travelli is a correspondent for The Times based in New Delhi, covering business and economic matters in India and the rest of South Asia. He previously worked as an editor and correspondent for The Economist. More about Alex Travelli
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