Indian Prime Minister Narendra Modi. Picture: REUTERS

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OUR Brics colleagues have not been doing all that happily lately. China’s growth is slowing and concerns about its financial sector abound. Brazil’s economy, the darling of investors just four years ago, has fared poorly. Investors are even less comfortable with Russia, given the goings-on in Ukraine.

India, however, is the subject of much excitement among international investors, with new Prime Minister Narendra Modi seen as the man who can fix the deep-rooted economic problems of the world’s largest democracy, and 10th-largest economy.

Though Mr Modi’s Bharatiya Janata Party won only 31% of the vote, it won a clear majority in the lower house of India’s parliament — the first time in decades that the ruling party has been in this strong a position. As chief minister of Gujarat, Mr Modi was at the helm of a state whose economy grew faster than India’s and was seen as more business friendly, less corrupt, less bureaucratic and with better infrastructure — attributes that attracted significant investment.

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India’s economic growth rate has dropped to little more than half of the 9% at its peak, inflation is at 9%, with food price inflation running high. Unemployment is rising, the electricity supply is unreliable, and corruption endemic. The country has fiscal and current account deficits.

Mr Modi has told voters that unemployment, high prices and corruption can be fixed. And markets are enthusiastic. The rupee has been on a rally since the election, hitting 11-month highs against the dollar.

As The Economist characterises it, India’s economy was the size of China’s three decades ago but is now a quarter of the size — despite spurts of growth and bouts of reform it has never achieved momentum. It has remained "a giant economic mediocrity". However, says the magazine: "Now, for the first time ever, India has a strong government whose priority is growth."

Not that it is going to be easy to achieve for India what Mr Modi did in Gujarat. Gujarat has 60-million people; India 1.2-billion. Not only will Mr Modi need to manage fractious federal politics, but much of the power when it comes to economic policy and implementation rests with the states, not federal government.

To get the economy going, he will have to push through structural reforms, of costly subsidy and welfare programmes, as well as changing labour markets, cutting corruption and red tape, reforming public finances and reshaping a system in which a fraction of people pay tax.

It is a big ask. But he is clearly sending the right signals to investors — that he is serious about growth, about reforms, and can make it happen.

That matters, in a world in which emerging markets are not nearly as favoured as they were. The global recovery is being led by the advanced countries — emerging market growth is slowing from its heady highs. China’s slowdown has affected commodities markets, and improved productivity in advanced markets means emerging markets may not benefit from growth in manufactured exports as they once did. Many have had consumer booms that were not sustainable. And fiscal consolidation may put constraints on infrastructure investment. On top of all that is the prospect of US monetary tightening and its impact on capital flows to emerging markets. In that environment, structural reforms to these economies will be needed to ensure robust growth.

India, like South Africa, is one of the so-called "fragile five" emerging market economies with fiscal and current account deficits, dependent on flows of foreign investment to finance these. All these five have had, or will be having, elections this year. International investors have been looking closely at the outcomes. They are looking at whether new governments are going for growth, and how committed they are to navigating through structural reforms to get growth going.

The signals matter. The commitment to good economic policy choices, and to taking investors seriously, will matter even more. As South Africa’s new Cabinet starts its work, it would do well to remember that.