Many observers tend to assume that India will play a large and growing part as a great power in a wider ‘Indo-Pacific’ strategic system, that it will use its growing power to balance and limit China’s regional weight. Some caution is called for — although this outcome is possible, it is far from inevitable.
When the global financial crisis swept across the world in 2008, it was widely hoped that the external demand shock would affect India as badly as China. After all, exports of goods and services accounted for about 40 percent of Chinese GDP, and domestic consumption for around 50 percent, while India consumed over two thirds of its GDP and exported only around 20 percent. As things turned out, while both economies initially had a relatively soft landing, Indian growth has dipped far more sharply than that of China.
Why?
India’s Pakistan dilemma continues, as Pakistani Defence Minister Khawaja Asif warned that they reserve the option of using nuclear weapons. The statement was made a week before Prime Minister Narendra Modi’s meeting with Pakistani Prime Minister Nawaz Sharif in July 2015 on the sidelines of the Shanghai Co-operation Organization summit at Ufa, Russia. But the meeting did little to abate either ceasefire violations along the borders or terrorism.
The World Bank announced new predictions for gross domestic product (GDP) growth among the world’s nations through the end of 2015. Although it slightly downgraded India’s overall annualized growth rate prediction, it was enough to put India in the number one seat for GDP growth by the end of the year.
The International Monetary Fund (IMF) recently conducted stress tests to model what effect an appreciation in the value of the US dollar would have on economies around the world. In a somewhat surprising turn, those who fared worst in a world with a more valuable dollar were not exporters of goods to America or countries dependent on US goods, but rather, Indian businesses.
The reason, according to the report, was a possible worsening of borrowing costs and earnings. Troubling news for Indian businesses, as the dollar has been on a sustained track of appreciation.
The parliament of a representative democracy is essentially a mirror of the democracy’s society. Naturally, societies still entrenched in patriarchal constructs have male-dominated legislatures. While there is still a global underrepresentation by women in decision-making roles, the Indian Parliament in particular continues to rank among the lowest in the world in women’s representation.
There appears to be growing euphoria that it is India’s ‘manifest destiny’ to overtake China and become the fastest growing major economy and a major world power. But unless India successfully introduces productivity reforms and opens its markets, this ‘destiny’ will remain a pipe dream.
Indian Prime Minister Narendra Modi is in trouble. He and the Bharatiya Janata Party (BJP) romped to power in 2014 on an anti-graft and pro-governance platform. Today, thanks to what is being popularly dubbed as ‘Lalitgate’, both Modi and his party are seen as condoning nepotism.
Extensive commentary on the latest Indian GDP growth numbers has been unable to clear prevailing confusion on whether the economy is in its recovery phase or not. It would be more useful to focus on the data that the ordinary Indian cares about: jobs growth and employment. Yet, unfortunately, employment still does not seem to figure as a priority for Indian policymakers. This lack of attention to employment in a country that boasts the youngest population in the world is simply incomprehensible.
India’s domestic and international economic choices have not always been the wisest.
At independence, India was determined to transcend the distorted pattern of economic integration with the world that two centuries of exploitative colonialism had engendered. However, in the process, it ended up effectively locking itself out of global trade and investment flows altogether—just at the time when advanced countries were tearing down their mercantilist tariff walls to make way for the liberal, post-war trading order.
