PM Modi invokes 'Fragile Five' in Independence Day speech. Who were they?

Prime Minister Narendra Modi, addressing millions from the Red Fort in New Delhi on India’s 80th Independence Day, referred to the nation’s past inclusion in the so-called “Fragile Five” group of economies. He highlighted how India had transformed from being part of this list, once viewed as economically vulnerable, to becoming one of the world’s fastest-growing major economies in recent years. His remarks underscored a shift in perception, contrasting the economic conditions of the previous decade with the progress made since his government took power in 2014. Modi’s reference to the “Fragile Five” came amid a broader narrative of economic revival. The term, introduced by investment firm Morgan Stanley in 2013, identified five emerging economies, Brazil, Indonesia, South Africa, Turkey and India, as particularly susceptible to financial instability due to factors such as high inflation, large current account deficits and reliance on foreign capital. At the time, these countries faced heightened risks as global financial conditions shifted, especially following the tapering of the US Federal Reserve’s quantitative easing programme. This led to a surge in capital flight from emerging markets, leaving many of these nations exposed to sudden liquidity shocks. India’s inclusion in the Fragile Five reflected concerns over its economic vulnerabilities. During the period of the United Progressive Alliance (UPA) government, which governed from 2004 to 2014, the Indian economy struggled with persistent inflation, a growing trade deficit and a depreciating rupee. These challenges were exacerbated by the withdrawal of US monetary stimulus, prompting a sharp decline in investor confidence. As a result, India’s current account deficit reached 5.1% of gross domestic product (GDP) in 2012, indicating that the country spent significantly more on imports than it earned through exports. The rupee also fell sharply, losing up to 12% of its value against the US dollar within a few months. However, by 2014, India had managed to exit the Fragile Five classification. This marked a turning point, as the government implemented measures aimed at stabilizing the economy. Central Bank Governor Raghuram Rajan played a key role in this transition, working alongside policymakers to address fiscal imbalances. Initiatives such as reducing gold imports and promoting export competitiveness helped narrow the current account deficit. Additionally, the central bank’s interventions supported currency stability, contributing to a stronger financial position. Since 2014, India has experienced substantial economic growth, surpassing Japan to become the world’s fourth-largest economy. Its rapid expansion has positioned it as a major player in global markets, though challenges remain. While the country has largely distanced itself from the Fragile Five label, some analysts argue that structural issues persist, including uneven income distribution and infrastructure gaps. Nonetheless, Modi’s emphasis on this historical context reflects a deliberate effort to frame the nation’s journey as one of resilience and achievement. As India continues to navigate complex economic landscapes, the legacy of the Fragile Five designation serves as both a cautionary tale and a testament to the potential for transformative change. With ongoing reforms and sustained growth, the country remains poised to further solidify its standing on the global stage.