After a slew of economic reforms targeted at the World Bank mandated privatization and liberalization goals in the decade of 1990s, India was poised to leap like a tiger with the dawn of the fresh century.
All indicators marveled at the robust economic health of the BRIC nations including Brazil, Russia and China bracing to lead the world in the race over economic turf.
The newly sprung hopes of the gigantic India, so long compared to the slow paced pachyderm trailing at 2 to 3 percent derisively referred “Hindu” growth, came crashing on the heels of 8 to 10 percent growth recorded over the last decade. This is not surprising in view of the present government labeled the most corrupt government in independent India at the helm for the second consecutive term.
According to a June 14 TimeStory, Standard and Poor’s (S&P) warning that India may eventually become the first BRIC fallen angel with Indian paper being relegated to junk bond status must be seen in the weakened policy making frame work in the government. The S& P warning released on June 11 is the part of its report “Will India be the first BRIC fallen angel". The warning comes close on the heels of S&P’s down grade of India’s rating from stable to negative. India’s rating of BBB is the lowest among BRIC countries and is the only BRIC nation with negative S&P rating. In comparison China is AA with stable outlook.
While India’s economic slowdown should be globally alarming, it has attracted only a modicum of attention. It may not even look like slowdown by the U.S standards for Indian growth at IMF estimated 6.9 percent for 2012 is strong enough by the U.S standards.
The most worrisome aspect of the decline, however, is its uneven distribution with the greatest impact upon the poor. At this rate it is feared that a generation of Indians counting several millions will continue to wallow under the poverty line. In comparison, the problem of euro zone pales in significance.
While this is the small picture, the bigger picture in contrast is painted by Scott B. Sumner, the Bentley College economist, according to whom, India is likely to emerge the largest economic powerhouse in the world, by the end of this century. While China’s population will peak relatively soon, India commands 65 percent under 25-years youthful population that will continue to drive the Indian economic growth engine to the position of the largest economy. Besides, the Indian economy will likely reinvigorate the poorer neighbors – Bangladesh, Nepal and perhaps, Pakistan and Myanmar.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com