Ahead of US President Barack Obama’s second visit to Delhi, many international eyes were on the Indian economy which, after having flagged for several years, is showing significant signs of renewed vitality.
A decade ago, India was frequently bracketed with China as one of the BRIC economies — rising global powers whose young population and sheer size gave them huge potential. However, while China has romped ahead, growing at double-digit rates, India, the world’s largest democracy, has sometimes struggled to live up to those hopes.
The IMF last week predicted that India could overtake China to become the world’s fastest-growing major economy by next year, with a growth rate of 6.5 percent, topping its prediction for China of 6.3 percent.
Last year, India’s economy grew by only 5.8 percent, against China’s 7.4 percent, according to forecasts published by the IMF, and by 5 percent compared with 7.8 percent for China in 2013.
“That’s a reasonable assessment. China has hit a demographic trap. But India’s working population is increasing all the time, producing, saving and consuming,” Delhi-based economist and analyst Mohan Guruswamy said.
Some observers are more conservative in their assessment, but few doubt the dramatic change in atmosphere attributable to the landslide victory of Indian Prime Minister Narendra Modi and his Bharatiya Janata Party in last year’s election, and the appointment of respected economist Raghuram Rajan as Reserve Bank of India governor.
Rajan surprised financial markets by cutting interest rates earlier this month, as the falling cost of oil dampened the risks of inflation. Modi, who was elected on a pro-development platform, has promised to push through some of the major reforms long called for by financial institutions and foreign investors, cutting red tape, slashing subsidies and easing the path for overseas firms.
Though some are growing impatient at the delay in big-ticket measures, the difference to the sense of drift of the lattter years of India’s last administration — led by the center-left Congress Party — is marked. Low oil prices have also given India’s public finances a big boost.
However, the IMF said that the prospects for a pick up in growth could be threatened by “any slackening in the reform momentum.”
“I think the reform plans of the new prime minister are promising. We are going to have to see the speed of the implementation,” IMF research department deputy director Gian Maria Milesi-Ferretti said.
“The main challenge for India is creating jobs,” Guruswamy added. “There needs to be rapid industrialization in India, and that needs reforms of labor laws and land acquisition procedures, among many other things.”
Few doubt, however, the scale of the obstacles that remain. Bureaucracy and red tape, as well as a huge deficit in infrastructure and a severe lack of skilled workers, could all combine to put the brakes on growth. Bad loans are a major issue for Indian banks, and much of the country remains mired in poverty. Ministers admit privately that skill levels are very low.
The government also currently lacks a majority in the upper house of India’s National Assembly, a problem which, thanks to India’s voting system, is unlikely to be resolved until 2017 or later. This makes passing major reforms significantly more difficult.
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
If you had a vision of the future where China did not dominate the global car industry, you can kiss those dreams goodbye. That is because US President Donald Trump’s promised 25 percent tariff on auto imports takes an ax to the only bits of the emerging electric vehicle (EV) supply chain that are not already dominated by Beijing. The biggest losers when the levies take effect this week would be Japan and South Korea. They account for one-third of the cars imported into the US, and as much as two-thirds of those imported from outside North America. (Mexico and Canada, while
I have heard people equate the government’s stance on resisting forced unification with China or the conditional reinstatement of the military court system with the rise of the Nazis before World War II. The comparison is absurd. There is no meaningful parallel between the government and Nazi Germany, nor does such a mindset exist within the general public in Taiwan. It is important to remember that the German public bore some responsibility for the horrors of the Holocaust. Post-World War II Germany’s transitional justice efforts were rooted in a national reckoning and introspection. Many Jews were sent to concentration camps not