Al Ahram Al Ektesadi, pp.70-71, (25-8-2008)

On the occasion of the celebration of India's Independence Day:

Are the current bilateral relations as strong as the ancient ones

By: Nazira Al Afandi

The celebration of the 61^st anniversary of the independence of India coincided with the 60^th anniversary of establishing diplomatic ties between Cairo and New Delhi. During those two occasions, a question was posed: are the current Egyptian-Indian relations as strong as the old ones? We admired the Indian struggle against the British colonialism. In 1931, Mahatma Gandhi was crossing the Suez Canal on board of a ship and a committee went to the Suez region to receive him and to express the solidarity between the Egyptian and Indian national movements against the British occupation.

Half a century passed over the inception of those strong relations and the Egyptian Indian solidarity against the British occupation. However, we should stress the fact that the nature of the challenges facing the Egyptian and Indian economies nowadays are similar. This was quite clear from the statements government by the Indian Ambassador in Cairo Mr. A. Gopinathan during the celebration of 61^st anniversary of the Independence of India in the lecture he gave before the Egyptian Council for Foreign Affairs in February 2008.

Egypt and India has strong political and historical ties. Both of them are facing similar developmental, economic and social challenges. They are both facing challenges related to overpopulation, limited area of land, pollution, environment degradation, housing, education, health care, food security, energy security, employment, supporting the poor, inflation, and modernization of agriculture and industry.

If the diagnosis of the similarity of the challenges in both countries was precise, then both countries should study the experience of each other in addressing such challenges. As we are talking on the occasion of the celebration of India's Independence Day, then we should start with the achievements of the Indian economy over the recent years and how it is competing with the strong Chinese economy.

Talking about the Indian economic performance does not mean that we should ignore the challenges that face it and impede its thrust as it is a common phenomenon in all developing countries.

The growth rate of the Indian GDP hit 8.8% during the first quarter of the current year.  The growth rate in the industrial field reached 5.4% during the month of June. If we look a little bit back, we will find out that India has achieved a growth rate of 9% during three consecutive years. It has foreign currency reserves of $ 316 billion. Thus, the balance of trade deficit is due to the energy bill which led to the increase of the imports from $ 69 billion to $ 120 billion during the current year. 

The rising economic growth rate, the accumulating foreign exchange reserves and the growing role of the Indian companies internationally attracted more foreign investments to the stock exchange and the Indian companies locally. The foreign investments in the Indian stock exchange are estimated at $20 billion as a net figure after excluding remittances abroad. Meanwhile, FDI registered $29.9 billion and FII registered $20.3 billion in 2007-2008.

Noticeably, the national savings rate has risen amounting to about 35.6% of GDP in 2007-2008 against 34.8% of GDP in 2006-2007. The rise in the savings rate was reflected to investments which registered 35.9% of GDP in 2006-2007.

The boom of the Indian IT sector is noteworthy. The IT services sector is expected to grow at 33.3% from $47 billion in 2007 to $64 billion in 2008. The contribution of this sector to the GDP jumped from 1.2% in 1998 to 5% in 2008.

This sector has grown to meet the needs of both the local market and exports. According to the National Association of Software and Service Companies (NASSCOM), the exports of software and services are expected to rise to $60 billion by 2010, based on the growth achieved over the past years.

In addition, the small and medium-sized enterprises have contributed to reducing poverty and promoting economic growth. This is the greatest challenge facing India as 220 million are impoverished. The agricultural revolution has increased the Indian grain production from 51 million tonnes in 1950 to 227 million tonnes in 2007.

Overpopulation and the rise in the purchasing power in India led to the continuation of the challenge as well as the efforts made to fight it. Such efforts might succeed and might face obstacles. Yet, India is surely increasingly establishing itself economically at the global level. These fruits should be examined and promoted and negative aspects should be avoided. So, exploring the deep roots helps in brining about the same fruits in view of the many official visits exchanged between India and Egypt.

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