With the world's most developed economies reeling under the incubus of what is already being called the Great Recession, India at the beginning of the year took stock and issued a revised estimate for GDP growth in the 2008-to-2009 fiscal year. Its projection came out at a healthy 7.1 percent.
It is striking that even amid all the doom and gloom assailing world markets, there is no fear of a recession in India. Even the pessimists are speaking only of lower positive growth.
This is quite a turnabout for an economy that for years had crept along at what was derisively called the “Hindu rate of growth” — around 3 percent — while much of the rest of Asia shot ahead. For more than four decades after independence in 1947, India suffered from the economics of nationalism, which equated political independence with economic self-sufficiency and so relegated the country to bureaucratic protectionism and stagnation.
But, since 1991, India has liberalized its economy and profited from globalization. Its tech-savvy information-technology pioneers, software engineers and call-center operators have made the country an economic success story.
India has multiplied its per capita income levels many times over since 1950, and has done so far faster in recent years than Britain or the US did during and after the industrial revolution.
In the last 15 years, India has pulled more people out of poverty than in the previous 45 — 10 million people a year on average in the last decade. The country has visibly prospered, and, despite population growth, per capita income has grown faster than ever before. The current financial crisis is unlikely to change the basic success story.
India's financial system suffers from few of the creative and risky derivative instruments that caused such problems in the West. A tradition of conservative banking regulation and a tough-minded governor of the Reserve Bank (India’s central bank) ensured that Indian banks did not acquire the toxic debts flowing from sub-prime loans, credit-default swaps and over-inflated housing prices that assailed Western banks.
The negative effect of the US financial setbacks on Indian stock markets, therefore, made little sense, since they bore no relation to the real value of Indian companies. Instead, the decline in Indian stocks reflected foreign investors' liquidity problems: they withdrew from holdings in India because they needed their money back home, not because it wasn't growing for them.
Of course, economies that depend on foreign investment are bound to be hurt nowadays, because those investors have less capital to invest. But there are two reasons to be confident that India will weather the storm.
First, India has considerable resources of its own to put toward growth, and has proven itself skilled at the art of channeling domestic savings into productive investments. Second, once things have begun to stabilize in the West, investors looking for a place to put their money will look anew at India, owing to the opportunities for growth and the sheer size of the market.
That said, India has relied much less on foreign direct investment than China, and has even exported foreign direct investment (FDI) to Organization of Economic Cooperation and Development countries. Despite being seen as a poster child for the benefits of globalization, India is not unduly dependent on global flows of trade and capital. India relies on external trade for less than 20 percent of its GDP; its large and robust internal market accounts for the rest.
India's private sector is efficient and entrepreneurial, and its capital and management skills have proven able to control and manage assets in the sophisticated financial markets of the developed West. India clearly has the basic systems it needs to operate a 21st century economy in an open and globalizing world.
Obviously, the terrorist attacks of late November complicate this story. The terrorists attacked India's financial nerve center and commercial capital, a city emblematic of the country's energetic thrust into the 21st century. They struck at symbols of the prosperity that have made the Indian model so attractive to the globalizing world, a magnet for investors and tourists alike. Indeed, by striking hotels favored by foreign businessmen and visitors, they undermined the confidence of those whom India needs to sustain its success story. Terror may add to the time India will need to recover from the economic crisis.
But India is already bouncing back. The hotels assaulted and burned in November reopened their doors a month later. Investors are returning, and FDI inflows this fiscal year are set to exceed the US$25 billion received in 2007 and last year. At the end of last month, Indian Prime Minister Manmohan Singh assured parliament that “India would emerge the least affected among the countries of the world from the current economic crisis.”
So, for those looking for signs of recovery from the global economic downturn, India remains the place to watch. The World Bank's annual assessment of global economic prospects said India’s economy could even triple in size in the next 15 to 20 years. A few more slumdogs may become millionaires by then.
Shashi Tharoor is a former under secretary-general of the UN.
COPYRIGHT: PROJECT SYNDICATE
The saga of Sarah Dzafce, the disgraced former Miss Finland, is far more significant than a mere beauty pageant controversy. It serves as a potent and painful contemporary lesson in global cultural ethics and the absolute necessity of racial respect. Her public career was instantly pulverized not by a lapse in judgement, but by a deliberate act of racial hostility, the flames of which swiftly encircled the globe. The offensive action was simple, yet profoundly provocative: a 15-second video in which Dzafce performed the infamous “slanted eyes” gesture — a crude, historically loaded caricature of East Asian features used in Western
Is a new foreign partner for Taiwan emerging in the Middle East? Last week, Taiwanese media reported that Deputy Minister of Foreign Affairs Francois Wu (吳志中) secretly visited Israel, a country with whom Taiwan has long shared unofficial relations but which has approached those relations cautiously. In the wake of China’s implicit but clear support for Hamas and Iran in the wake of the October 2023 assault on Israel, Jerusalem’s calculus may be changing. Both small countries facing literal existential threats, Israel and Taiwan have much to gain from closer ties. In his recent op-ed for the Washington Post, President William
A stabbing attack inside and near two busy Taipei MRT stations on Friday evening shocked the nation and made headlines in many foreign and local news media, as such indiscriminate attacks are rare in Taiwan. Four people died, including the 27-year-old suspect, and 11 people sustained injuries. At Taipei Main Station, the suspect threw smoke grenades near two exits and fatally stabbed one person who tried to stop him. He later made his way to Eslite Spectrum Nanxi department store near Zhongshan MRT Station, where he threw more smoke grenades and fatally stabbed a person on a scooter by the roadside.
Taiwan-India relations appear to have been put on the back burner this year, including on Taiwan’s side. Geopolitical pressures have compelled both countries to recalibrate their priorities, even as their core security challenges remain unchanged. However, what is striking is the visible decline in the attention India once received from Taiwan. The absence of the annual Diwali celebrations for the Indian community and the lack of a commemoration marking the 30-year anniversary of the representative offices, the India Taipei Association and the Taipei Economic and Cultural Center, speak volumes and raise serious questions about whether Taiwan still has a coherent India
RSS