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India's economic sentiment: How much faith do people have on Narendra Modi's economic policies?

With the markets - Nifty and Sensex - showing positive gains in recent months post elections, how does India fare in comparison to the global economic mood

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The Indian economy has shown an upward growth trajectory after the Lok Sabha elections. This could be attributed to business-friendly sentiments shaped by the Narendra Modi government. Call it 'after elections buoyancy' or 'actual reforms', but economic stability is an important factor for any government to create jobs, improve economic production and drive growth while keeping the interests of businesses and the public in sight. 

A recent report by Pew Research Centre has thrown in some interesting facts about global economies - both developing and emerging ones. The 44-country survey conducted among 48,643 respondents from March 17 to June 5, 2014, takes consideration of countries and economies in the following categories -- advanced economies, developing economies and emerging economies

According to the report, in most nations, people say their country is heading in the wrong direction and most voice the view that economic conditions are bad.

Below is the breakdown:

Countries viewing their economy in negative light: Greeks (97% say economic conditions are bad), Italians (96%), Spanish (93%) and Ukrainians (93%). 

Countries viewing their economy in positive light: Chinese (89%), Vietnamese (87%) and Germans (85%).

United States: 58% are of the opinion that the American economy is not doing well; only 40% say its performance is good. 

Countries with high expectations: Latin American nations of Peru at 77% and Colombia at 70%.

According to the report, the most optimistic nation is China at 80% and the IMF expects growth to be 7.1% by 2015.

In Asia, India and Vietnam lead the charge at 71% and 74%. For India, IMF has forecasted growth of 6.4% while for Vietnam, it is 5.7%. 

The Indian economy has shown positive signs of revival after the Lok Sabha elections as the markets surged and investor confidence improved from May 2014 onwards. This coupled with economic reforms, disinvestment policies and RBI's measures in keeping key rates unchanged has benefited the economy. Though policy wise, not much has been done with regard to subsidies, FDI etc, the Modi government has tried addressing the problems by managing bureaucracy in stringent terms. 

A couple of years ago, India's growth story was completely different when the economy grew at 9% a year. Now it is at 6% (5.7% in second quarter). Recently, the Asian Development Bank (ADB) had also projected a positive outlook for India. The Manila-based lender was bullish on India’s future in a supplement to its 2014 economic outlook for the region saying it expected gross domestic product (GDP) to grow by 6.3% next year, compared to an earlier projection of 6%. “After winning a decisive parliamentary victory, the new (Modi) government is better positioned than the old to pursue the reform necessary to unlock the economy’s growth potential,” the bank said in its summary. 

Around 60% of Indians are dissatisfied with economic progress in the emerging economy. The same is at 8% for China while Japan shares the same ratio with India. Around 62% of Americans and 55% of UK citizens are dissatisfied too. The biggest discontent is from Europe at 77%, followed by the Middle East at 72%. With imminent wars, expansion of the Islamic State across borders and the international coalition's target to destroy the dangerous group, it may take a lot of time and effort for Middle Eastern countries and West Asia to get on the road to recovery. 

Problems faced by emerging economies, including India: 

A total of six Asian countries out of ten figure in the discontentment list over economic progress. 

The next parameter is the perception about economic progress. Around 69% of Indians think that the country's economy is bullish and bouncing to new highs while 89% of Chinese people think the same.

A total of 71% respondents have said that the Indian economy will see improvement in the future while 80% have said the same for China. After a key meeting between Prime Minister Narendra Modi and Chinese Premier Xi Jinping to strengthen bilateral ties, both the Asian juggernauts are being closely watched by developed economies and banks. 

The next set of issues that the government has to address are the job markets, debt situation and foreign investors returning to the Indian economy. Meanwhile, more key reforms are awaited from the Modi government to improve the economic status and give an impetus to production and development. 'Make in India' is an attempt in this direction to make India the global hub for production. 

vishalmanve.dna@gmail.com

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