Oslo, 18th August: NICCI members were effectively brought up to speed on the latest in Indian economy and politics, as seen from the Norwegian Embassy in Delhi. Giving his annual exclusive update to NICCI members, Ambassador Nils Ragnar Kamsvåg first dived straight into the current Indian political scene.
He established the fact that Prime Minister Modi’s party BJP now totally dominates Indian politics.
-Narendra Modi enjoys a popularity that any politician can envy him, Mr. Kamsvåg said.
He characterized Modi and BJP as extremely well organized, with impressive political skills, modern and adapted at winning.
Mr. Kamsvåg referred to BJP’s success in the state elections earlier this year. Not only did BJP get a majority in the very important and populous state of Uttar Pradesh – but the party also managed to turn loss in some other states into victory, with clever political maneuvers. As in Goa where independents over-night was turned into supporters, pushing BJP over the majority line.
The Norwegian Ambassador forecasted a BJP with a majoritarian approach, with most observers expecting another win for BJP in the elections in 2019. The opposition is simply too weak at the moment. According to Kamsvåg everything thus indicates at least 7 more years with BJP behind the wheels.
Demonetization
PM Modi has demonstrated great political skills and a willingness to take bold moves as through what he described as one of the most radical economic experiment carried out anywhere -the demonetization. With only 4 hours’ notice, the Modi government announced the 500 and 1000-rupee bank notes invalid. A big effort towards black money and corruption was the message of the government. Although the economists in India were divided regarding the economic benefits and international experts mainly negative, the public overwhelmingly accepted the government’s rationale for the move.
The other side of the coin
Being predominantly positive, Mr. Kamsvåg did not hide the facts of a growing worry the cultural agenda of the hindu-nationalistic party BJP is about to shine more through. Especially minorities fear signals of a less tolerant and inclusive India.
Economy
Proceeding to the economy section of his speech, Ambassador Kamsvåg set the scene by telling that -India continues to be the bright spot internationally.
The growth rate continues very steadily well above 7%, the highest among the world’s large economies. Kamsvåg also gave us the historic perspective of the GDP growth which was as low as 1% back in the post-independence years (1947 onwards), at 3,5% until the eighties, and above 6 % since 1980.
Kamsvåg pointed out some of the main characteristics of the 2017 Indian economy; only 45% of the income is from the organized sector and 90% of the Indian workforce sorts under the informal sector. More than 50% works agriculture, which contribute about 15 % of GDP. Major urbanization and industrialization could be important drivers to fuel continued growth, although it is questionable whether a strategy of rapid industrial growth can reap the same benefits as for the so-called “Asian tigers” and China.
-The average age in India is just 28 years, Mr. Kamsvåg told us. A very young population assuring a very huge workforce – where 1 million people is added evry month.
The Norwegian Ambassador compared the Chinese economy to the Indian and explained that the two economies were about the same size in 1980 -but today the Chinese is 5 times India’s.
India’s education level in 2017 is equal to China’s in 1980, which leads to one of India’s main challenges to be handled the coming years; education.
Reforms has been the Modi governments focus, Mr. Kamsvåg continued, although the main trust has rather been on increased efficiency than on grand reforms. One very important exemption has been the implementation of the very important pan India GST (Goods and service tax) that was put to effect 1th July this year, ending a 10-year process of making India one huge single market.
Nils Ragnar Kamsvåg told us that many planned reforms are in waiting status, but assuring us that things are absolutely going forward, although upcoming elections may not be conducive for new big reforms the next 2 years.
Ease of doing business in India
Kamsvåg told that India has just slightly improved its ranking on the World bank group’s “Ease of doing business index” the last two years, from number 142 to 130 of 190 countries. However, the business climate survey released in Oslo in January this year, strongly indicates Norwegian businesses present in India are optimistic about the future of doing business in India.
The India-EFTA free trade agreement? Next meeting in September.
Foreign policy
-After Trump, predictability in international relationships are not as high as they used to be, Ambassador Kamsvåg said.
-India’s so important relationship with USA continues to be close for now. Kamsvåg continued by drawing a rough picture of India’s relation to the closest neighbors. In spite of some hope of improvement in the India-Pakistan relation under Modi, it is back to being very tense. As it has for 70 years since the partition. The current difficult situation with China is however more of a strategic challenge for India. The China relationship has worsened steadily since 2015, and has hit a low this summer, due to unresolved border disputes flaring up this summer. This happened on the background of disagreements in several areas, including China’s new silk route development.
-China is investing big in neighboring countries, also in infrastructure. Chinese investments in India is modest, actually less than Norwegian investments in India, Kamsvåg said.
Chair in Norway India Chamber of Commerce and Industry, Tima Iyer Utne, thanked the Ambassador for the very valued update and for assuring we can now define the annual update to our members as a tradition. She invited Kamsvåg to update us again in Oslo next August.
NICCI members and guests were left very impressed by the Ambassadors India-knowledge and effortless storytelling skills, keeping all of us maximum interested throughout the one hour long speech.
Big thanks to our member Advokatfirma Schjødt AS for hosting our breakfast event on 18th August and to CEO Inger Roll-Matthiesen for personally giving us a warm welcome.
Written by: Trond Skundberg. General Manager in Norway India Chamber of Commerce and Industry