India’s economy grew at a 7.4% annual rate between July and September this year, according to official figures, driven by robust domestic demand and manufacturing activity. In addition to surpassing last quarter’s 7% growth rate, the country zoomed ahead of China as the region’s leading economic growth engine. China’s annual growth rate dropped below 7% for the first time since 2009 as its economy has struggled to overcome weaker demand in the West.
With the election of Narendra Modi as India’s new Prime Minister last year, economists are hoping for a number of much-needed reforms to drive investment and economic growth. The new government is already pursuing some large-scale reforms, including the cleanup of its tax system, reduced barriers for foreign investment, and new infrastructure projects. In aggregate, these activities could help drive both short- and long-term economic growth.