The gloss is coming off the India story. Recent weeks have seen downgraded growth forecasts, rising inflationary pressure, poor job creation numbers, a faltering stock market and an erratic trajectory in inbound foreign investment.
In a recent essay in the International Herald Tribune (“After the robber barons,” April 14, 2011), I made the case that corruption and inequality were natural byproducts of rapid economic growth in the context of market-based capitalism and a lax regulatory regime.
Everyone knows about the ‘old’ threats to sustained rapid growth in India, including poor infrastructure, distorted labour markets, competitive populism, the weak record of human resource development, painfully slow reforms and the reduced dynamism of industrial countries, post-crisis.
Suddenly this month the esoteric world of international finance is resonating to the clash of currencies. On September 27 Brazil’s finance minister stated that an “international currency war” has erupted. In its October 16 issue the London Economist put “Currency wars” on its cover, with evocative imagery of an aerial dogfight between paper planes of currency notes from different countries.
The proximate cause for this column is the publication by BS Books of the India Health Report 2010 edited (and mostly written) by Ajay Mahal, Bibek Debroy and Laveesh Bhandari. For anyone interested in India’s health status, access to healthcare and medicines, emerging health problems, infrastructure of health services, medical ethics, healthcare financing, government programmes and regulations and key issues in health sector reform, this report is an excellent introduction-cum-survey. Here I provide a selective summary to whet the appetite of readers to peruse the full report.
These are uncertain times for global economic governance. For over six decades after the second world war the west framed the rules of engagement for the global economy.
In the initial years, the United States was the preeminent power, which oversaw the creation of the Bretton Woods system (International Monetary Fund and World Bank) and the initial rounds of trade liberalization under the newly-born General Agreement on Tariffs and Trade (which became the World Trade Organization at the end of the Uruguay Round in 1993).
As Europe recovered from the ravages of war and Japan launched on its high growth phase, these new leviathans (especially Europe) increasingly asserted themselves and won greater voice and roles in world economic governance. But it was still an essentially western enterprise, with a demilitarized Japan content to go along in return for an American nuclear umbrella.
The Soviet Union and its satellites were not an integral part of this economic system and the developing countries didn’t carry significant economic clout, not even the populous Asian giants of China and India.
The pre-budget Economic Survey of the government, published at the end February, exudes optimism on economic growth: “Indian gross domestic product can be expected to grow at 8.5 +/- 0.25 per cent (in fiscal year 2010/11), with a full recovery breaching the 9 per cent mark 2011/12.”
Crisis? What crisis? Indian policymakers are not asking such a complacent question. But India has had a “good crisis”. Now its task is to unwind the exceptional support given to the economy and push through the reforms needed to sustain fast and inclusive growth.
The remainder of this column can be read here. Please post comments below.
This post is part of an occasional series on the Indian economy.
The people of India suffer from terrible health. Around 40 per cent of all children under three years are stunted. Nearly 80 per cent are anaemic. Over half of all married women (age 15-49) are anaemic. The incidence of communicable diseases is rampant. Even the well-off often fall victim to outbreaks of diseases such as dengue, diarrhoea, malaria and hepatitis, not to mention swine flu.
As part of the FT’s week-long series on the Brics emerging markets, experts on each of the four economies will contribute to the debate about the role of Brics consumers in the global economy. Today’s entry focuses on India, check back throughout this week for entries from the other countries.
By Suhel Seth
Much has been made of India’s brisk economic march and that in the global comity of economic superpowers, India is inching towards the high table but the fact is that there are two Indias and both shall remain for a long time to come. One which still experiences the ravages of poverty and poor infrastructure while the other that sees luxury brands tempting the now-rich-and-arrived Indian. But brands in India, more than the politician ironically, have understood the power that both these Indias possess in their own unique way.
Much of what happened in 2009 in the world economy escaped India only because while one part had become dysfunctional (no de-coupling here), the other was happily untouched by the global meltdown, which is what continued to propel India’s almost 8 per cent GDP growth.
But the real story of India and the brands within is in effect the story of the quintessential Indian consumer and the DNA which remains largely unaltered. So while on the one hand, 185 Bentleys were sold in 2009 in India, the country also witnessed the launch, and then the delivery of the Nano: a $2500 car from the house of Tatas. From October, 2009 to January 2010, the Tatas have already sold more than 16,500 Nanos: in a country, which also boasts of the world’s largest two-wheeler population.