'We were once in Fragile Five': What does it mean, and how has India's economy changed in 12 years

Indian Prime Minister Narendra Modi on the 80th Independence Day on Saturday (Aug 15) said India had moved from being part of the ‘Fragile Five’ economies to becoming the world’s fastest-growing major economy over the past 12 years. In his speech from the Red Fort, the PM highlighted what he described as the country’s rapid economic transformation. PM Modi said India’s economic progress had been driven by the collective efforts and resolve of its 140 crore people.

“We were once counted among the ‘Fragile Five’. However, India has, within just 12 years, emerged as the world’s fastest-growing major economy,” Modi said in his 13th consecutive Independence Day address. The PM said India’s transformation showed that the country’s ambition of becoming a developed nation, or ‘Viksit Bharat’, by 2047 was achievable.

What was the ‘Fragile Five’?

The term ‘Fragile Five’ was coined in 2013 by Morgan Stanley to describe five emerging-market economies considered particularly vulnerable because of their dependence on foreign capital and exposure to external economic shocks.

India was grouped with Brazil, Indonesia, South Africa and Turkey. At the time, concerns over high inflation, a large current account deficit, slowing growth and pressure on the rupee had raised questions about the stability of the Indian economy.

The grouping gained prominence during the so-called ‘taper tantrum’ of 2013, when expectations that the US Federal Reserve would reduce its monetary stimulus triggered capital outflows from several emerging markets.

While highlighting the country’s economic gains, PM Modi also called for further reforms, arguing that India’s legal and institutional framework needed to keep pace with a changing economy and society. “India cannot march forward in the 21st century by relying on laws of the previous century,” he said.