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India: sustaining growth amid external and internal challenges | RiskMap2022

Asia Pacific

India: sustaining growth amid external and internal challenges

Hemant Shivakumar | Associate Director

If India’s devastating second COVID wave dominated 2021’s global headlines, barring the emergence of a more toxic variant the dominant story in 2022 will be its strong economic rebound.

The defining opportunity of 2022 will be India’s digital and data revolution, best characterised by the rapid expansion of its digital frontiers beyond fintech and into areas like agriculture and health. An audacious push to collect vast amounts of farm and health data will have potentially far-reaching consequences for not just data privacy but also welfare delivery, innovation, and investments in these sectors.  


New Delhi’s challenge will be to steer the economic rebound and opportunity story amid a complex internal and external environment. Domestically, Prime Minister Narendra Modi’s ruling Bharatiya Janata Party (BJP) government confronts high unemployment, rising inequality and poverty levels, and a protracted agrarian unrest as the BJP heads into crucial state elections in 2022. 

The business environment in 2022 – like in 2021 – will continue to be characterised by conflicting signals. Privatisation of state-owned entities will remain a priority as the government seeks to shore up revenue. Regulatory overzealousness coupled with protectionist rhetoric will mark its approach towards data, internet technology and e-commerce sectors, triggering enforcement in areas like anti-trust. New Delhi’s unwillingness to join regional free trade mechanisms like the Regional Comprehensive Economic Partnership (RCEP) means it is unlikely to effectively challenge regional competitors like China and Vietnam, and benefit from foreign companies revaluating their supply chains. 


Externally, India confronts a demanding regional security environment. The Taliban’s takeover in Afghanistan will prompt New Delhi to prioritise counter-terrorism objectives to mitigate the potential spill over of militancy risks into its restive Jammu and Kashmir region and other cities. Ongoing border tensions with Pakistan and China will maintain India’s external security challenges and New Delhi’s ties with Beijing will remain strained. New Delhi will instead increasingly seek to develop stronger security and commercial ties with the US as well as the Quad diplomatic grouping that includes Australia, Japan and the US.  

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