The Indian Century
Wednesday, January 6, 2010 22:39
Every so often, the occupant of 7 Racecourse Road in New Delhi declares it to be an “Indian century”. Manmohan Singh, prime minister ever since 2004, has not resisted the temptation. A decade into the 21st century, few would bet on the elephant managing to lumber past the dragon, or succeeding in consigning to history Chinese aspirations for a sinocentric, unipolar Asia.
Yet for the first time, political risk is now a bigger threat to India’s growth story than bad economics. Like many other developing countries, post-1947 India followed an inward-looking strategy of heavy industry-biased industrialization. This was in part a reaction to the laisser faire policies followed by the British in the 19th century. But the deep-seated opposition to liberal reforms that once characterized the nationalist elite has been waning gradually since 1991.
The days of the so-called Hindu rate of growth, when India’s economy grew at barely 2-3% a year for decades on end, scarcely keeping up with the unbridled increase in its population, are over. Annual growth over the past five years has averaged more than 7%. The country’s planners have set their sights on sustained double-digit expansion in the medium term, a credible goal if the country’s yawning infrastructural shortcomings can be addressed. Furthermore, over the first 10 years of the new century, the Bombay Sensitive Index has risen 214% in dollar terms, outperforming the Shanghai market by 8%.
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