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5 signs India won't become an economic power

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Sources: Der Spiegel, FirstPost, The New York Times, Reuters, Time, The Washington Post

India sees itself as a country on the rise, but stubborn obstacles — including endemic corruption and political gridlock — suggest that it might fall short of its promise

“As Victor Hugo once said, ‘No power on earth can stop an idea whose time has come.' I suggest to this august house that the emergence of India as a major economic power in the world happens to be one such idea." With those words to the Indian parliament in 1991, then-Finance Minister Manmohan Singh introduced a raft of reforms that loosened his government's stranglehold over the market and sparked years of economic growth that lifted millions out of poverty. Singh, a soft-spoken technocrat, built on those reforms after becoming prime minister in 2004, and until only recently it was a given that India "was on an inexorable road to becoming a global power," says Simon Denyer at The Washington Post. But since winning a second term in 2009, Singh's fortunes have turned — and there are serious doubts that his country, the world's largest democracy, can fulfill its potential. Here, 5 signs India may not become an economic power:

1. The economy is slowing
India's economy grew at a rate of 5.5 percent in the latest quarter, a marked slowdown from the blistering 10 percent pace it was setting a couple of years ago. While most countries — including the U.S. — could only dream of a 5.5 percent rate, India "needs to stay on a high-growth path to pull hundreds of millions" of people out of poverty, says Krista Mahr at TIME. Two-thirds of India's 1.2 billion people live on less than $2 a day, and more than 500 million Indians are under the age of 25, meaning the government "needs to figure out how to guarantee those millions a future of long, gainful employment," says Mahr. If the economy continues to lumber along, those millions in poverty could begin to strain the country's resources and prevent a jump to greater prosperity.

2. Corruption
Corruption is rampant in India, from the top echelons of government to the local police demanding bribes, and many Indians feel that "political parties and their representatives are nothing more than obstacles to doing business," says Erich Follath at Der Spiegel. Singh's government has been wracked by corruption scandals, with opponents accusing officials in his Congress Party of giving sweet deals to politically connected corporations in the telecommunications and coal industries, which ended up costing the government tens of billions of dollars in revenue. The penchant for corruption is a turnoff for foreign companies, and even aid programs for the poor have been hijacked. "On the long road between greedy politicians in New Delhi and corrupt local officials, the money tends to disappear before it reaches the poor," says Follath.

3. Political paralysis
Opposition parties in recent weeks have been hammering Singh over the coal scandal, suspending all parliamentary activity for days running. Similar paralysis accompanied outrage over the telecommunications scandal. In addition, Singh barely has control over his own coalition, which represents "interests from many corners of the vast country" and "has grown particularly unwieldy," says Kahr. With tensions running high, little business has been done since Singh's second term began.

4. Reform has stalled
With the corruption scandals and parliamentary gridlock, the government has failed to pass far-reaching reforms that are considered necessary to catapult India to the next stage of development, such as ending wasteful subsidies and reducing barriers to foreign investment. "It's very clear that it is misgovernance that is holding India back from realizing its potential and blunting its competitive edge," says FirstPost in an editorial. India is falling farther and farther behind in basic areas that need to be improved: "Transport, communication, and energy." The country received a stark reminder of that earlier this summer, when a massive electrical blackout left 700 million people without power.

5. Singh hasn't come through
Singh, who was "once so eager to bring about reform, seems exhausted and tired of his position," says Follath. He has refused to "stick his neck out on reforms that will continue the process of liberalization he helped start," says Kahr. And while he has not been accused of corruption himself, he has steadily developed a reputation as "a dithering, ineffectual bureaucrat presiding over a deeply corrupt government," says Denyer. If he doesn't turn things around soon, Singh "is in danger of going down in history as a failure."

http://theweek.com/article/index/232990/5-signs-india-wont-become-an-economic-power
 
India is growing at 5% of a small base economy (1.5 trillion).

Whereas even America growing at only 1%... of 15 trillion, is adding more than twice as much to their economy every year as India is.
 
India is growing at 5% of a small base economy (1.5 trillion).

Whereas even America growing at only 1%... of 15 trillion, is adding more than twice as m
uch to their economy every year as India is.

and what will happen if we keep growing at 5% forever and US grows at 1%.

also keep in mind while we are growing slowly china is also growing at only 6% now. So what will you do about it. Go worry about China's growth as we all know China economy might in fact be contracting and even this 6% growth numbers might be eyewash from ccp.
 
Blame the global slowdown which impacts on exports/investment but lets hope things soon pickup like before where India was growing 8%+
 
1. The economy is slowing - Did't you hear "Fluctuation" . Even China is facing the same.


2. Corruption - it is lot less than Pakistan and China....only difference is that in India it comes out on surface...other places it never come on surface.


3. Political paralysis - 2 years back...we had same situation....did not affect economy then....no relation


4. Reform has stalled - If "not allowing Walmart in India" is reform stall....then ..yes


5. Singh hasn't come through- Soon he is going to become Finance minister....will be more focused...
 
India is growing at 5% of a small base economy (1.5 trillion).

Whereas even America growing at only 1%... of 15 trillion, is adding more than twice as much to their economy every year as India is.

It is easy to criticise India, being at a stable, world-dominating position that China is. Indeed some fault lies with global economic analyst who have started comparing the two economies, perhaps too early, just on the basis that both have large population and until recently 9%+ growth.

We cannot compare India to any other country in the world. It is unique in it's diversity and unfortunately, the magnitude of problems that arise from this diversity. But despite all this the fact that we are able to achieve even 5% growth , even on the onset of a global recession, with a policy paralysis, and a newly developing economy, is a fact that I personally find quite heartening.
 
India is growing at 5% of a small base economy (1.5 trillion).

Whereas even America growing at only 1%... of 15 trillion, is adding more than twice as much to their economy every year as India is.

growth percentage....shows how particular economy is doing...you argument is full of stupidity
 
growth percentage....shows how particular economy is doing...you argument is full of stupidity

So you want to compare percentages, without any reference to the base size of the economy? OK.

Did you know that Sri Lanka is growing at 8.2%, Bangladesh is growing at 6.7%, and Bhutan is growing at 8.4%?

Forget being the "2nd fastest growing economy in the world", India is not even the 2nd fastest growing economy in South Asia, in percentage terms.
 
India grows inspite of the politicians, not because of it.



“India grows at night while the government sleeps”

by Gurcharan Das

29.05.2012 09:25
Ken Silva
Vienna—Thursday night the Hayek Institut and the Austrian Economics Center had the pleasure of hosting guest speaker and intellectual giant, Gurcharan Das.
The columnist, philosopher, writer of fiction and nonfiction, and former CEO of Proctor & Gamble India’s presentation, “India grows at night while the government sleeps”, explained why India is the second-fastest growing economy in the world despite its large and burdensome government.
“India is one of the most capitalist countries in the world—not because government wants it, but because government can’t do anything about it,” Das said.
To illustrate his point, Das told the tale of two cities: Gurgaon and Faridabad. In 1979 both cities were poor, but Faridabad had the advantage of being rich in natural resources, as well as having a direct railway to the India’s capital, New Delhi.
Indian central planners calculated that Faridabad would be a symbol of India’s success, and spent much time and energy in attempting to grow the area. Yet surprisingly, three decades later Gurgaon is an economic powerhouse, while Faridabad remains an impoverished area.
What was the difference between the two areas? According to Das, Gurgaon prospered because it had no municipal government.
“Gurgaon’s disadvantage—no local government—became its advantage,” Das said. “The people there had no one to get in their way.”

The only downfall of having no municipal government, according to Das, was a lack of public utilities. To solve this problem, he called for a “decisive liberal state” with three qualities: a government bound by the rule of law; an executive that can act swiftly; and civil servants who are accountable to the people.
“While China has to fix its politics, India has to fix its governance,” he said. “The first one to do so will win ‘the race.’”
Das went on to elaborate on the difference between China and India. He pointed out that while China has disciplined civil servants and a strong infrastructure, the citizens there do not enjoy liberty. He contrasts this with India, which has more individual liberty but a highly inefficient bureaucracy.
Das warned that if neither of these countries fix these problems, they risk falling in the “middle income trap”—a situation where developing countries plateau after reaching a certain point, usually around a GDP per capita of $8,000. Such a trap occurred in many Latin American countries during the 1980s, where their rapid growth stalled because of a failure to develop reliable institutions.
Although wary of the middle income trap, Das was hopeful for India’s future. He attributed his optimism to a growing middle class that will demand better governance.
“There is a rising ‘bourgeois dignity’—an awakened middle class that will no longer put up with unaccountable civil servants,” Das said. “The middle class has risen from eight percent in 1980 to 30 percent today. When they become the majority, India’s governance will change.”
 
Lol....there are tones of erticles posted by western media...that india is still poor,india will not become superpower,economy slowing down or China will colapse,chinese economy slows,chinese export deeps...etc just to satisfy their ego....despite its problems Asia will keep on rising and west will keep falling...
 

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