India has suffered brutally from Covid-19. The country has the world’s second highest number of cases, at 43.3 million, and at 525,000 the third highest number of deaths. The world will never forget the apocalyptic sight of hundreds of makeshift funeral pyres in public places, when the crematoria couldn’t handle the numbers of dead.

But with the resilience typical of the national character, India launched a remarkable recovery. In 2021, the country produced 1.56 billion doses of vaccine for domestic use, with more than 77% of adults being fully vaccinated by the end of that year. The country also made a significant contribution to the global recovery, with 66 million doses exported up to the end of March 2021. Exports were halted at that time in favour of local distribution.

That tremendous vaccination drive brought the pandemic under control, and India was able to return to something closer to normality, in terms of economic activity and regular daily life.

The success of the vaccination programme is testament not only to the capabilities of the country’s huge pharmaceutical sector, but also to its ability to pull together and execute a nation-wide plan on an unprecedented scale. Dedicated task forces and committees were formed at national, state, district and even block level, to manage everything from R&D to distribution, storage and delivery of the vaccine.

India’s IT skills played an important role in managing the campaign. The central government set up a group to facilitate optimal utilisation of technology to make COVID-19 vaccination all-inclusive, transparent, simple, and scalable. It also created and deployed a digital platform to track registration for appointments, administration of the vaccine and the issuing of certificates.

India is sometimes, rather lazily, described as a chaotic society, but the success of the vaccination drive would have been impossible without this highly coordinated, government-led approach, which certainly compares favourably to the efforts for example of the United States.

What may seem chaotic to outsiders, we prefer to think of as indicative of India’s ability to improvise, think out of the box and come up with innovative solutions to problems.  It is the combination of this creativity with the ability to implement mass-scale projects like the national vaccination effort that gives us long-term confidence in the opportunities India presents to the world.

Certainly, the country’s economic recovery is still patchy.  The headline figures suggest the speed of India’s economic rebound has been impressive, but the performance across sectors is inconsistent. While the larger corporates are doing relatively well, smaller companies and informal workers are lagging behind. These are the historically weaker sectors that were most affected by the pandemic in the first place, and their recovery is important for consumption, production and investment.  The Government’s efforts to accelerate the vaccination drive will play an important role here, with more than 80% of the population having received both doses, and the vaccine now being made available to children between 12 and 14 years old.  This is a positive indicator for consumption and growth, and should help high-contact services industries in particular.

In terms of investment, the government has focused on increased expenditure on infrastructure. In the short term, this has facilitated the rapid recovery in growth from the worst numbers of the pandemic, but it hasn’t addressed the unevenness of the recovery and there is a case to be made for more targeted support, which would also help reduce the risk of inflation.

Although we are currently seeing a resurgence in Covid cases, OE (Oxford Economics) expects far less economic damage from the current outbreak compared to the first two waves, as the economy has become more resilient to disruptions from Covid. OE also sees more sustained re-openings and a durable recovery from Q2 onwards. Their 2022 GDP growth forecast has gone up slightly, to 7.9% from 7.8%.

We can’t deny that the country is currently facing some serious geo-political problems.  Religious unrest between the Hindu majority and the Muslim population has led to diplomatic issues with many Middle East countries that are important economic partners to India. Border confrontations with China continue to be a threat to peace. With regard to the war in Ukraine, India has annoyed the western powers by remaining neutral and refusing to openly cite Russia as the guilty party.

India is also in the front line of the climate crisis.  The heatwaves that are afflicting many parts of the world have been at the most severe in northern India, with temperatures in Delhi reaching 49 degrees while simultaneously, the state of Assam is experiencing deadly floods and mudslides. This direct exposure to the effects of global heating will inevitably drive action and investment in decarbonisation and sustainability, as the country moves towards net-zero. Earlier this month, Prime Minister Narendra Modi asked state chief ministers to draw up plans to mitigate the impact of extreme heat. It won’t be easy, but there are immense opportunities for the green economy.

Despite all these challenges, India – with its 1.4 billion population – continues to be a market that investors cannot overlook. When we think about the fundamental structural factors that will bring about the economy of the future, it is notable for instance that India has the world’s highest adoption rate of FinTech, at 87% significantly higher than the global average of 64%.  Prime Minister Modi has said: “There is an explosion of fintech innovation and enterprise in India. It has turned India into a leading fintech and startup nation in the world. The future of fintech and Industry 4.0 is emerging in India.”

We endorse the Prime Minister’s confidence. In the face of all its challenges, India is already the world’s fifth largest economy. The gradual but irresistible pivot of the world’s centre of gravity towards the Indo-Pacific will only lift India higher.