As India aims to reach developed economy status within two decades, experts argue that its ability to adapt swiftly to crises could be the key to sustaining reform progress in an increasingly volatile world.
India’s history suggests that economic shocks can force political courage. That is the argument running through a conversation between StratNewsGlobal.Tech and Bhuvana Anand, co-founder and chief executive of Prosperity, as India weighs how to keep reform momentum alive in a more volatile world.
Since the pandemic, the global economy has been hit by war, inflation, supply-chain breakdowns, tariff disputes and the accelerating effects of artificial intelligence, while geopolitics has begun to reshape energy markets and capital flows. Anand’s central point is that the real test is not whether the next crisis can be forecast, but whether institutions can adapt quickly enough when it arrives.
For India, the stakes are unusually high. The country has set itself the goal of becoming a developed economy within roughly two decades, which means it must keep reforming even as uncertainty becomes a normal feature of the environment. The question is whether India’s institutions have enough depth and flexibility to turn disruption into an advantage rather than a setback.
History offers one reason for optimism. As Business Standard reported in a recent look back at the 1991 balance of payments crisis, India was forced to pledge gold reserves to avoid default before launching sweeping changes that dismantled industrial licensing, reduced the state’s role in key sectors and opened the economy more fully to foreign investment. Those reforms, backed by assistance from the International Monetary Fund and World Bank, marked the start of modern economic liberalisation.
Research from Stanford’s King Center says the crisis-driven changes of the 1990s produced a rapid improvement in India’s external position and helped drive unusually strong growth between 1992 and 1997, even if the reform pace later slowed. Other assessments, including work from Stanford and Cato, argue that India still needs further liberalisation, stronger governance and fewer new controls if it is to move from middle-income success to high-income status. That makes the current debate less about whether crisis can produce reform than about whether India can build a system that reforms before the next shock arrives.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
