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ILADO: Economic lessons for Kenya from India

In 1991 India survived near bankruptcy when its treasury was unable to pay the country's debts.

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by PAUL ILADO

Opinion16 January 2024 - 03:30
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In Summary


  • Some things stand out include political stability brought about by good election management and hygiene and sound government policies
  • Others are sustained manufacturing and exports; a booming pharmaceutical industry; and an Information Technology sector driven largely by young people
President William Ruto and Indian Prime Minister Narendra Modi during Ruto's visit to India on December 5, 2023.

In 1991 India survived near bankruptcy when their treasury was unable to pay its debts.

Thirty-two years later India has turned around its economy and is now the world’s fifth-largest economy after the US, China, Germany and Japan.

With a population of 1.4 billion people, the Prime Minister Narendra Modi-led country is on its way to overtaking Japan and Germany to become the third-largest economy in the world by 2027.

“The reason for this phenomenal growth is the consumption boom brought about by our population. Good political governance and a well-coordinated approach have moved us to where we are now,” says External Affairs minister Subrahmanyam Jaishankar.

With Kenya’s economy faltering at the moment, the question is what can Kenya learn from India to turn around the economy.

First, let us look at what India has done right.

What is remarkable about India is that between 2011 and 2015, more than 90 million people in India rose out of extreme poverty, thanks in part to robust economic growth that has improved the overall standards of living in the country.

As a result of the economic growth, wages are expected to grow at 4.6 per cent and disposable income will continue to grow more than 15 per cent. These are just some of the pointers to India’s state of economic growth.

Sarah Joy, the chief manager at Exim Bank, says apart from private consumption, India's GDP is also fuelled by government spending, investments and exports. In 2022, India was the world's sixth-largest importer and the 9th-largest exporter

“India’s economy is also driven by traditional village farming, industrial-scale agriculture, handicrafts, and a wide range of industries,” she adds.

India is the world's second-largest producer of fruit, and the global leading producer of lemons, bananas, mangoes, papayas and limes.

While forestry is a relatively small contributor to the country's GDP, it is a growing sector and is responsible for producing fuel, wood-based panels, pulp for paper and paperboard.

With a well-educated English-speaking population, India is a major exporter of Information Technology services, outsourcing services and software workers.

In addition to chemicals, India produces a large supply of the world’s pharmaceuticals as well as billions of dollars worth of cars, motorcycles, tools, tractors, machinery and forged steel.

Over the last two decades particularly, the pharmaceutical industry has grown from strength to strength, making India a major exporter of generic medicines and vaccines across the world.

It is one of the top five sectors contributing to foreign exchange earnings and providing employment to over 2.7 million people, hence, playing a major role in the Indian economy.

The question is how Kenya can learn from the South Asian country with a population the size of Africa combined.

Some things stand out include political stability brought about by good election management and hygiene and sound government policies; sustained manufacturing and exports; a booming pharmaceutical industry; and an Information Technology sector driven largely by young people.

Kenya, like many other African countries, is reliant on foreign demand to drive its economy, India on the other hand enjoys robust domestic demand, which has insulated it from external shocks.

India has a well-diversified economy with several facets driving economic activity and growth. Kenya, on the other hand, has an economy that is relatively diversified but remains vulnerable.

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