Post subprime crisis, back in 2008-09 there were all praises for India having a conservationist policies & not letting any of its bank & financial institution succumb amidst the crisis situation. Indian government, public & private companies have constantly tried to attain stability since then.
Come 2010, the acknowledgement continues & results are visible, the confidence on this emerging nation is seen in continuous appreciation of rupee which today stands at Rs.44.50 against dollar; Reserves stand close to 300 billion dollars; Investments by foreign institutional investors in the domestic equity market which have crossed the $20-billion mark this calendar year (The previous record was $17.7 billion in 2007, just before the US sub-prime-led financial crisis hit economies all over) & the net investment in the debt market has already crossed $10 billion. This is the highest ever FII inflow into the country.
Sensex crossed the much awaited 20000 mark. Exports have been advancing (though trade deficit of 13.06 billion dollars is also observed). The icing on the cake is that seventeen new billionaires joined the Forbes India’s Rich List this year, as Mr Mukesh Ambani topped the list for the third year on a row with the country recording 69 billionaires this year, from last year’s 52.
The country’s top 100 rich people had a combined net worth of $300 billion more than the combined GDPs of all the other nations in South Asia put together.
And then how the infamous Common Wealth Games should not get mention here, the prelude to CWG was applauded by all (it’s said well begun is half done) and India has continued to make good impression by garnering gold to retain its position at No.2 and the Indian hockey team qualifying for finals beating England.
The ceremony of course arrived as a breather after continuous tidings about not very conducive environment like horrible toilets, stagnant puddles, falling ceiling, a terrorist attack on JamaMasjid, Attacks on foreign visitors etc. Though it seemed India was not prepared, so far India has put up a good show.
Indian economy is expected to expand by 8.5% this year and IMF has pegged it at 9.7%. (However it has a long way to go before it is as rich as China).
This is just the beginning. Make way people….. “India has arrived”.
The magic wand is India’s people power. I think India is soon going to replace Japan & may be outpace china in few years to come. Here is an amazing fact India’s working-age population will increase by 136m by 2020; China’s will grow by a mere 23 m.
India’s demographic dividend is soon going to reap rich benefits. China’s workforce will shortly start ageing; in a few years’ time, may be it will start shrinking. Thanks to its one-child policy. India is now blessed with a young and growing workforce ready to brave all odds in the battlefield. Its dependency ratio—the proportion of children and old people to working-age adults—is one of the best in the world and will remain so for a generation. Europe & Japan are also going to face decline in the working-age population.
Sluggish recovery is going to aggravate the problem for these rich nations. The disparity between the rich on one hand & emerging economies on the other is soon going to result in favor of the emerging ones.
India’s state may not be all hunky dory but its private companies are strong. Indian capitalism is driven by millions of entrepreneurs (advancing at increasing rate) all furiously doing their own thing. Post 1990s, after new industrial policy came into picture, India opened up to international trade; liberalization & privatization followed. Since then Indian business has been growing. The country now boasts of world class companies as well as new models of small & medium enterprises. They are less dependent on good deeds by the government, and more on wisdom, innovation & will to survive.
And the Bad & Ugly…
Well, every coin has a flip & flop side to it, so has India, given all the factors certain critical parameters which cannot be ignored are infrastructure crisis, populism, corruption, fear of losing the outsourcing destination advantage soon, lack of graduates with employable skills & equal distribution of wealth & its percolation at lowest level.
There are 450 million poor in India (more than in entire Africa combined) implies 450 million who are not financially sound & have least access to health care services. The inextricate link among the caste, politics, access to education & status in society is unmanageable. Not to forget Maoists waging war in more than a third of the country & more states demanding naxalite affected status the situation is getting worse.
The most critical being lousy infrastructure because it will drive away the investments & halt all development plans. India needs to spend $1.2 trillion on urban infrastructure or at eight times today’s rate; China’s capital spending on cities is roughly seven times greater than India’s. (Source: Mckinsey Consultancy)
The other blockage is a dearth of competent skills which can sweep away the so called dividend. Public schools are a big mess. India boasts of many universities but they churn out graduates who are not able to apply skills to real-world problems (employers have to incur training costs). At present India’s adult literacy rate is only 66% whereas China’s is 93%.
India has to carve its way out from this muddle. Macroeconomic policies must be recalibrated. The government needs to concentrate on growth by taking stern steps in planned manner rather than just garnering votes & castigating the whole nation for its own interests.