Wednesday, June 28, 2006 06/28/06-India Emerges

In today's excerpt, the nation of India emerges as a world power, on a path to quickly overtake Japan as the world's third largest economy and, at 1.1 billion people, eventually challenge China for its position as the world's largest nation:

"After three postindependence decades of meager progress, the country's economy grew at 6 percent a year from 1980 to 2002 and 7.5 percent from 2002 to 2006--making it one of the world's best performing economies for a quarter century...

"In the first decades after independence...socialist Prime Minister Jawaharlal Nehru and his imperious daughter, Prime Minister Indira Gandhi...shackled the energies of the Indian people under a mixed economy that combined the worst features of capitalism and socialism. Their model was inward-looking and import- substituting rather than outward-looking and export- promoting...

"In the 1980s, the government's attitude toward the private sector began to change, thanks in part to the underappreciated efforts of Prime Minister Rajiv Gandhi. Modest liberal reforms--especially lowering marginal tax rates and tariffs and giving some leeway to manufacturers--spurred an increase in growth to 5.6 percent...

"More than 100 Indian companies now have a market capitalization of over a billion dollars, and some of these--including Bharat Forge, Jet Airways, Infosys Technologies, Reliance Infocomm, Tata Motors, and Wipro Technologies--are likely to become competitive global brands soon. Foreigners have invested in over 1,000 Indian companies via the stock market."

Gurcharan Das, "The India Model," Foreign Affairs, July/August 2006, pp. 2-6


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