The Indian economy is coming back. After several years of disappointing performance, the authorities are shifting to policies aimed at boosting the annual growth rate closer to the roughly 9% level that India achieved from 2004 to 2008. That won’t be easy. India has many handicaps and lacks many of the things that are needed to sustain rapid growth.
It’s hard to be optimistic about India right now. Asia’s third-largest economy is growing at the slowest pace in a decade, the trade gap is widening, the rupee is plunging and the government’s cost of borrowing is soaring as confidence evaporates and investors flee.
High inflation, federal budget deficits, a record trade imbalance and sluggish growth have plagued the Indian economy over the last year, but a recovery may soon be in the offing.
In a view that stands apart from the gloomy headlines and skepticism about India’s economic prospects, Credit Suisse Head of Southeast Asia and India Economics Robert Prior-Wandesforde said last week that the economy’s downward trajectory may have finally hit bottom.
Partha Dasgupta: Getting India wrong:
Uncertain Glory: India and Its Contradictions
by Jean Drèze and Amartya Sen (Allen Lane, £20). Why Growth Matters: How Economic Growth in India Reduced Poverty by Jagdish Bhagwati and Arvind Panagariya (PublicAffairs, £19.99)
NEW YORK TIMES -- "As the founder of a successful offshore oil-rig engineering company, Mr. Ashok Khade is part of a tiny but growing class of millionaires from the Dalit population, the 200 million so-called untouchables who occupy the very lowest rung in Hinduism’s social hierarchy.
IN MAY America’s Federal Reserve hinted that it would soon start to reduce its vast purchases of Treasury bonds. As global investors adjusted to a world without ultra-cheap money, there has been a great sucking of funds from emerging markets. Currencies and shares have tumbled, from Brazil to Indonesia, but one country has been particularly badly hit.
Both India and China are in the middle of their worst economic slowdowns in many years. If IMF projections for 2012 prove accurate, China’s GDP will advance at the slowest pace since 1999, and India’s at the slowest pace since 2002. There is a lot to learn from these downturns. One is that economies, no matter how promising, can’t grow at fantastically high rates indefinitely, with GDP ascending in neat, upward straight lines. We also learn that “decoupling” is still not a reality (especially for China).