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3 Feb 2007

India Poised

Posted by Oblivion in General | 1:01pm

For the past couple of years, one has been hearing a lot about India being up and ready to become an economic superpower, the 9% growth rate and how it means a better India. India ranks 10th in the country brand index 2006 (source: Futurebrand), FDI is on the rise and more cities are getting wired. Total trade in goods and services has leapt to 45% of GDP, from 17% in 1990. Behind the euphoria and hype, however, the real picture continues to be bleak. Majority, though, are content to buy the optimistic speculations by media and push reality below the carpet. Some important facts (courtesy, The Economist)  that should help us appreciate the status quo better and more objectively:

What media don't tell
A recent study from Goldman Sachs, which forecast that India could sustain 8% growth until 2020, was widely trumpeted in Indian newspapers. However, the bank's report clearly stated that this would require better education, labour market reforms and less red tape. Oddly, most newspapers failed to mention that.

India v China
They point to new mobile-phone subscriptions, which are running at a higher monthly rate than in China, as evidence of their economy's vigour and modernity. But look again. Perhaps the only thing really growing faster in India than China is hype.

India spends 4% of its GDP on infrastructure investment, compared with China's 9%. In absolute dollar terms, China spends seven times as much on its infrastructure.

The total deficit is closer to 8% of GDP, the biggest among the main emerging economies. India also has the highest ratio of public debt to GDP, at 80%.

The road taken
Recent visitors to Delhi were greeted by a poster campaign by The Times of India announcing

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