Vantage | Why world sees India as Asia's new growth engine

A new report by the rating agency Standard and Poor (S&P) has shown confidence in India and its economy. S&P is one of the big three global rating agencies. They track and regularly update economic growth forecasts.The agency has revised India's growth forecast to 6.4 per cent for the current financial year (2023–24) from the earlier projection of 6 per cent. This means the country is doing better than expected in the current fiscal year.Although the fiscal year 2025 is now predicted to be slower (from 6.9 per cent to 6.4 per cent) as per the S&P forecast, this is lower than India's own estimate of 6.6 per cent given by the Reserve Bank of India.So India will grow strong this year, and the momentum will continue in 2025. And then, in 2026, there is another big bump due, as India's growth rate should hit 7 per cent, making it one of the leading growth engines of Asia.Significance of the reportThink about what's going on in the world at the moment – the war and instability in West Asia, the conflict in Ukraine that shows no sign of ending, also, the constant tensions between the US and China – all these things are bad for business. And they seem to be getting worse at every turn. But despite all this, India is resilient and is defying expectations, and that is why this report is significant.The report is optimistic about India, and some other Asian nations. Vietnam will grow at 6.8 per cent. The Philippines at 6.4 per cent, and Indonesia at 5 per cent. These are the figures for 2026. So, S&P is predicting a rising Asia.Noticeable exceptionThis rise will be powered by India, and aided by the other aforesaid countries. However one major omission is noticeable. The list doesn't mention China – Asia's old economic driver. The S&P's outlook for China is not rosy. The headline itself says, "China slows, India grows".China would grow at 5.4 per cent this year. That's better than previous projections. But after that, China's growth will stagnate to 4.6 per cent in 2024, 4.8 per cent in 2025, and again 4.6 per cent in 2026.China's golden age of growth may be nearing its endDo you know the last time China had two consecutive years of growth below 5 per cent? It was after 1989 and 1990. Just after the Tiananmen crackdown, almost 35 years ago.And now it's happening again. So, China's golden age of growth may be nearing its end.There are a number of reasons for this. China’s debt-laden property sector is on the brink, S&P says that's a major reason for the slowing growth. The low demand for properties, and the resulting strain on developers. But that isn't the only reason. There are also geopolitical tensions.The world is finally waking up to the dangers of investing in China. They're either trying to de-couple or de-risk. Countries are looking at alternatives like turning to India, Vietnam and other Asian nations. The latest reports say apple manufacturer foxconn plans to invest 1.5 billion dollars in India. Tesla is eyeing a 2 billion dollar investment. All of these companies have major factories in China already. But they're looking at India now.So, it's not a coincidence that India is seen as Asia's growth engine. The S&P report also highlights domestic demand as a major growth driver, which again puts India in the driver's seat.India has a relatively young and upwardly mobile population. These people will continue to generate demand for goods and services. China, on the other hand, is ageing rapidly. Its internal demand is faltering. When you connect these dots, you get the big picture: China's era is coming to a close. It will begin to stagnate unless it can fix its underlying issues, which is a tall order.So it's more likely that the baton has truly been passed. The future belongs to India. We still have a lot to do to catch up, but it seems like we are on our way.Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.Read all the Latest News, Trending News, Cricket News, Bollywood News,India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.