India Market Watch: Japan Seeks Infra Investments in Northeast, Harvard Says India Fastest Growing Economy

July 10, 2017 Posted by India Briefing Reading Time: 4 minutes

Japan wants to invest more in the northeast

Highly placed sources have confirmed that Japan is seeking greater investment opportunities in India’s northeast region. Japan is particularly interested in developing road connectivity between states like Assam, Meghalaya, and Manipur to boost trade and regional growth.

Also benefiting from such investments will be improved commercial linkages between Asia and Africa via the Dawei Special Economic Zone (SEZ) located in Myanmar. Dawei SEZ is jointly being developed by Japan, Thailand, and Myanmar, and connects the Indo-Pacific region.

Under India’s ‘Act East policy’, Prime Minister Modi’s government has actively courted investments from ASEAN states, especially in infrastructure and manufacturing while also promoting trade and business relations.

Finally, the Modi government has invited all the leaders of the ten Association of Southeast Asian Nations (ASEAN) as chief guests for next year’s Republic Day celebrations (January 26). The move is also a tactical signal to China whose relations with India and South East Asia are becoming increasingly strained.

India’s organized sector may be larger than estimated

New data tracking subscribers to the Employees Provident Fund Organization (EPFO) in India reveal that the size of formal employment may be greater than previous estimates. Official statistics from the EPFO show that its subscriber base grew by 26 percent in the first half of 2017 – from 38 million to 48.1 million.

The jump was a result of an amnesty scheme that allowed organizations to admit to the actual size of their staff – without incurring penalties on unpaid dues. The EPFO’s amnesty scheme encouraged companies to enroll workers who had joined their staff between April 1, 2009 and December 31, 2016.

The new numbers have important implications: for one, it calls to question the employment data studied by India’s policymakers, and second, it will impact the government’s social welfare spending.

As of 2016, India’s labor ministry had recorded the country’s labor market size to be at 475 million, with only 10 percent being formally employed. After the amnesty scheme, these numbers will have to be revisited.

India the fastest growing economy till 2025: Harvard study

Growth projections by Harvard University’s Centre for International Development (CID) has ranked India as the world’s fastest growing economy till 2025, maintaining an average annual growth of 7.7 percent.

A variety of factors support India’s positioning above China: diversification into new areas, such as expanding exports of chemicals, vehicles, and types of electronics as well as the country’s political, institutional, geographic, and demographic diversity. India has also grown its manufacturing and other productive capabilities in the recent past, according to the Harvard study.

Since advanced countries like Japan and the US will need to invent newer products and push technological frontiers, their economies will inevitably experience slower growth.

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