India's feckless elite

Article Highlights

  • India's economic rise looks the least certain that it has since the early 2000s.

    Tweet This

  • India must grow by more than 7% annually to keep pace with the 13 million entrants into the job market.

    Tweet This

  • The rupee has spent much of 2012 touching historic new lows. @Dhume01

    Tweet This

Just the other day, it seemed as if India could hardly put a foot wrong. Annual economic growth averaged above eight percent between 2003 and ’08, and the country was one of the world’s few major economies to escape more or less unscathed from the global financial crisis. In November 2010, President Barack Obama made the longest foreign visit of his presidency to India. There, in a rousing address to Parliament, Obama declared that “India has emerged,” and pledged to back New Delhi’s quest for a permanent seat on an expanded United Nations Security Council. By then, authors and analysts had already churned out a small rainforest worth of books and articles asserting that the 21st century belonged to Asia’s two giants, China and India.

Two years later, India’s rise looks a lot less certain. Economic growth slowed to an annual rate of 5.5 percent in the first quarter of the current fiscal year, and few independent analysts expected it to top six percent in the rest of the year. For a country still at an early stage of development—in dollar terms, the average Indian earns about as much as the average Chinese did in 2004—this augurs ill. Most economists believe that India needs to grow by more than seven percent annually merely to keep pace with the 13 million new entrants into the job market each year. (China’s growth rate, even after declining from its former torrid pace, is eight percent.) Pratap Bhanu Mehta, president of the Centre for Policy Research, in New Delhi, says India is “flirting with social catastrophe.”

Flagging growth isn’t the only cause for concern. Foreign direct investment plummeted 67 percent in the first quarter of the current fiscal year, to $4.4 billion. The rupee has spent much of 2012 touching historic new lows. (By mid-September, it had lost 20 percent against the dollar over the past 12 months.) Though arguably a one-off event, the massive power outage in July that left 600 million people without electricity dramatized the parlous state of Indian infrastructure to the world. The blackout was a powerful follow-up to a stark warning from ratings agency Standard and Poor’s the previous month—that India risked becoming the first “fallen angel” among the BRIC economies (Brazil, Russia, India, and China).

The full article is available at WilsonQuarterly.com

 

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Sadanand
Dhume

What's new on AEI

Holder will regret his refusal to obey the Constitution
image 'Flood Wall Street' climate protesters take aim at their corporate allies
image 3 opportunities for better US-India defense ties
image Is Nicolás Maduro Latin America's new man at the United Nations?
AEI on Facebook
Events Calendar
  • 29
    MON
  • 30
    TUE
  • 01
    WED
  • 02
    THU
  • 03
    FRI
Thursday, October 02, 2014 | 9:00 a.m. – 10:30 a.m.
Campbell Brown talks teacher tenure

We welcome you to join us as Brown shares her perspective on the role of the courts in seeking educational justice and advocating for continued reform.

Friday, October 03, 2014 | 12:00 p.m. – 1:00 p.m.
Harnessing the power of markets to tackle global poverty: A conversation with Jacqueline Novogratz

AEI welcomes you to this Philanthropic Freedom Project event, in which Novogratz will describe her work investing in early-stage enterprises, what she has learned at the helm of Acumen, and the role entrepreneurship can play in the fight against global poverty.

No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.