South Asia is in disarray, from Kathmandu to Karachi. While students in Bangladesh launched a revolution last year that ended former Prime Minister Sheikh Hasina’s 15-year administration, “Gen Z” protests about inequality and political elitism have erupted in Nepal. President Mahinda Rajapaksa of Sri Lanka was forced to leave after the country’s economy collapsed in 2022, while Pakistan is still engulfed in political unrest and another IMF bailout. However, despite all, India is notable for its stability, according to a report published in The Economist.
The research emphasizes how India’s economy has been remarkably resilient in the face of US President Donald Trump’s severe trade tariffs over Russian oil purchases and a brief military confrontation with Pakistan. India appears to be a peaceful island in a troubled neighborhood, with foreign exchange reserves of around $700 billion—enough to cover 11 months’ worth of imports—and consistent growth of 6–8%. That wasn’t always the case. From the war and famine in 1965 to the Gulf War in 1991, when the nation had to airlift gold to obtain loans, India has experienced numerous balance-of-payments issues since gaining independence.
Reforms implemented at the timeManmohan Singh, the finance minister, eliminated the “licence raj” and opened India’s economy, creating the foundation for the stability of today. India was listed as one of the “fragile five” economies that are susceptible to shocks from around the world as recently as 2013. The Economist notes that since then, it has reduced bad loans, cleaned up its banking sector, and practiced budgetary austerity. With goals to lower the debt-to-GDP ratio from 57 to 50 percent by 2031, the budget deficit has decreased from nine percent during the pandemic to less than five percent. India’s reliance on oil, which was previously its biggest weakness, has decreased thanks to policies for ethanol blending, increased refinery capacity, and low-cost imports from Russia.
Currently accounting for 15% of GDP, service exports—primarily IT and outsourcing—act as a buffer against external shocks. However, difficulties still exist. Resentment is fueled by caste-based job reservations, and graduate unemployment is close to thirty percent. However, the report noted that India’s youth seem patient in contrast to its neighbors who are engulfed in protests. According to surveys, people are hopeful for tomorrow but somewhat unsatisfied with their current situation. That optimism, which is based on observable growth and economic advancement, could be India’s best stabilizer in a volatile area.
