Modi’s Top Economic Aide Sanyal Shares India’s Secret for Success

During an event jointly organized by the High Commission of India and the Indian Business Council in Mauritius (IBCM), PM Modi’s top economic advisor Sanjeev Sanyal shared the formula for India’s success.

Prior to the event, Mr Sanjeev Sanyal had a meeting with Mauritian PM Pravind Jugnauth and also delivered a keynote address at the Africa Partnership Conference (#APC2023). He highlighted the special place that Mauritius holds within the Foreign Policy of India. Currently, India is focusing on the #IndianOcean, the #IndoPacific and the #GlobalSouth, of which Africa is a major part. Mauritius has the particularity of being a key stakeholder in all of these strategic groupings, not to mention the vibrant Indian Diaspora present in Mauritius.

In terms of #ODI, the investment of India into Africa cumulated to USD 75 billion over the past few years. It is worth highlighting that more than 90% of this capital was routed and structured via the Mauritius International Financial Centre (#IFC). Therefore, Mr Sanyal expressed the wish to further leverage Mauritius as a gateway to Africa.

Coming back to the remarkable rise of India over the past few decades, Advisor Sanyal revealed that the success can be mainly attributed to courageous reforms to improve efficiency and encourage entrepreneurship. He highlighted the ‘new thinking outside the box’ whereby India now aspires to be world-class in its endeavors, be it in infrastructure, #digitalization or even space exploration.

One particular case is the reform of the Patent System. It is well known that a dynamic Patent System is a reflection of a country’s ability to innovate and produce growth. In that regard, Mr Sanyal streamlined the patent application procedure and beefed up the capabilities of the Patent ecosystem to bring it to world-class level.

Another key reform was the coming into effect of the Insolvency and Bankruptcy Code (IBC) in 2016. Previously, there was a stigma attached to bankruptcy with the consequence that many zombie companies were kept on life-support using taxpayers’ money. The IBC required no less than a culture shock as well as a bold embrace of capitalist and market principles. It is also hoped that — through the ‘evolutionary process by natural selection’ made possible by the IBC — a culture of innovation and entrepreneurship will emerge.

The wave of reforms that paved the way for the success of India can be traced back to the 1990s when the bureaucracy started to shift from a control to a service mindset. Today, most of the major structural reforms which drove the first phase of growth have been successfully implemented. Therefore, the work of the Economic Advisory Council to the Prime Minister of India (PMEAC) has now shifted to undertake more challenging reforms in other critical areas such the Judiciary to reinforce the rule of law.

Based on the current growth trajectory, India is on its way to become the 3rd largest economy in the world by 2028. As Africa and India are both emerging, Advisor Sanyal believes that both can learn from each other. Having experienced the same painful colonial past and as members of the #GlobalSouth, India and Africa share many points in common and are thus natural partners.

He recalled that it was thanks in large part to the initiative by PM Modi during India’s chairmanship of #G20 that the #AU became a permanent member of the now #G21. The world has realized that global challenges, such as #ClimateChange, #CriticalMinerals or #FoodSecurity, cannot be properly addressed without the active collaboration of Africa.

On another note, Advisor Sanyal identified certain rating systems as a brake to the take-off of the #GlobalSouth. For instance, he found it a little odd that many of the high-ranked democracies in the world are actually ‘Kingdoms’. Similarly, he finds it ironic that one of the largest cigarette makers in the world is rated as a top #ESG company and even gets #CarbonCredits for growing tobacco.

Currently, the rating methodologies are biased against African countries which end up with poor credit and risk ratings. As a consequence, the cost of capital becomes prohibitive, leaving Africa behind as the other parts of world leap ahead.

Therefore, Sanyal called for an urgent reform of the Country Rating System. He hopes the MDB/DFI will integrate fairer and more equitable methodologies in their sovereign credit assessments.