http://www.economist.com/news/leaders/21644145-india-has-rare-opportunity-become-worlds-most-dynamic-big-economy-chance-fly
BRICS are the emerging economies in the world. They are Brazil, Russia, India, China, and South Africa. While some of these economies have been failing, there is hope in India. Last week, many articles noted the worries of the Chinese, as they look to develop long-run economic growth. On the other hand, on February 28th, India will be releasing its first new budget under Arun Jaitley, India's finance minister. He is part of the new government that ran on the platform of major reform and less red-tape. There was a major budget in 1991 that opened up India's economy to trade, competition, and outside capital markets. The article calls for another game-changing budget.
India possesses many qualities that could spur growth. It has a population of approximately 1.25 billion and half of that is under 25 years old. Although not all qualities are good. There has been a problem of taxes and tax collections in the past, but there is talk for reform that could level the playing field. From a macroeconomic standpoint, India has taken control of inflation, and the budget deficit has declined. All of these factors point toward a more stable economy. India does have some major problems to address if it will be the next growth-economy of the world. It has to take control of its power shortage and land distribution issues to promote growth. Furthermore, it needs to update its labor laws, some of which date back to pre-1950. These are major red flags that must be addressed by the new government.
I believe that India has many of the attributes necessary to achieve growth in the future, but its government needs to be proactive in lifting up this economy. What do you think?
3 comments:
One of the main reasons for India’s low economic development in the past has been a corrupt government. However, with the recent elections India has a new leader (Prime Minister Modi). As a former chief minister of Gujarat (an Indian state) he brought about tremendous economic growth. So, in terms of government being proactive, I think India has the right leadership. And with the potential India has, as stated in the article, India’s economy can indeed become better.
There's definitely a lot of potential in India as an economy, but there are, as the article points out, a number of hurdles to overcome. This next budget is a particularly important signal since it shows the line the government is taking. And considering the situation, a bold budget with lots of reforms and changes is probably in order. Being more open to trade and international markets, land reform and labor laws are probably the most important one.
But, even with positive reform changes, there needs to be care taken that the benefits are not lost in corruption and an inefficient public distribution system. If the govt. is able to significantly curb corruption and reduce red tape while passing significant reform, it could signal a very good future for the economy. It's a tall order, but there's hope that it will be accomplished.
I agree with the comment on the corrupt government, and this seems to be Brazil's problem currently. The article does point out a number of potential pitfalls to be considered. The other thing to consider is the metric used to measure its success: Like China, it has a very large population, and because of this average standard of living is likely going to take a long time to catch up to other economically-dominant nations (even if the country itself is doing well on the world market).
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