Brahm

Is India's Economy About To Blast Off?

In view of the constraints around due to the global situation, it is difficult to accept an emphasis on the word "blast" as applied to the Indian economy' growth. The essential difference made out by the author between India and China vis-a-vis the global factors is on the dot with regard to the relative impact. India is less affected by the global situation. than China.

Infrastructure growth can lift the economies of both countries significantly to avoid a deeper slide, and both can and will marshall plans to do so. However, the pace for execution of infrastructure investment are significantly different for each ofthese countries. India's processes are cumbersome and extrtemely prone to delay or sabotage, mainly due to a corrupt bureacracy and resultant endless scope for negotiation, endless protestr and review on procedural grounds, and loften resulting litigation. Due to the potential for huge leakage into the pocketrs of vested interests there is also considerable bickering and infighting beteween bureacrats, politicians on control and execution issuews before a project can get started.

The Indian economy is always going to be handicapped by these issues, unless India gets into the habit of setting up a government of the people, by the people and of the people. For many of us NRI's it is a source of shame and disenchantment to find that India's officials and politicians are determined to hold the people hostage to their own weaknesses and personal agendas. China has a a considerably better record in this respect. That is why China will always be ahead in forseeable future with regard to pace and rate of growth, despite the global constraints at times on its economy.

India Battered by Global Storm

This analysis is incisive! It implicitly focuses the reader on the essentials in the differences between the economies (and problems) of that of India with those of an emerging China. Or shall we say developed China!

The Indian (and also Brazil, perhaps) industrial growth story is still preserved though at a slower pace while that of China faces a significant slowdown or marginal decline. China's economy is much more meshed in with the larger global economy due to heavy export dependency, while India's is less so. The effect of commodities is larger on the Indian economy since it weighs in at heavier relative level in its consumption and much of it based on imports. Thus the effects of commoditities recently on Indian inflation based on this dependency has been much larger. Perhaps, with the fall in commodity prices globally there soon woul be significant relief from inflation for the Indian economy.

India is also likely to see significant pick-up in investments after the elections expected soon in development of its infrastructure which has been subpar in recent years. The authror's suggestion of the likelihood of the preservatgion of India's growth story is plausible. I would bet that it is highly likely. The one area of concern is in India's poor track record for development and growth of its farm sector and agri-industry.