India Set to Pass China As Fastest Growing Economy

With a positive demographic dividend, low hanging fruit and competent leadership, India is finally ready to fulfill expectations.

A chance to fly

India possesses untold promise. Its people are entrepreneurial and roughly half of the 1.25 billion population is under 25 years old. It is poor, so has lots of scope for catch-up growth: GDP per person (at purchasing-power parity) was $5,500 in 2013, compared with $11,900 in China and $15,000 in Brazil. The economy has been balkanised by local taxes levied at state borders, but cross-party support for a national goods-and-services tax could create a true common market. The potential is there; the question has always been whether it can be unleashed.

PM Narendra Modi passes budget test despite lack of reform dazzle

Jaitley's headline innovation was a roadmap for simpler taxation, with a promise to cut corporate tax to 25 per cent from 30 per cent over four years, and a commitment within a year launching a national service tax union to make business easier.

The budget also shifted more resources to states in a boost for federalism. It promised to clamp down on India's black economy and warned of tough new penalties including overseas asset seizures and jail time for tax evaders.

All of this was praised in India's leading newspapers and analyst notes, with public opinion also broadly positive.