Every day, evidence seemed to pile on to further reinforce the impression that India could run into some serious economic troubles really soon. I was particularly concerned that the country was not paying enough attention to the long-term requirements of resources, energy, and infrastructure.
Thus, it was pretty much all "doh!" for me when I read Tyler Cowen's NY Times column where he writes that "We ignore India’s troubling trends at our peril"
the economy has decelerated from projected rates of more than 8 percent, and negative momentum may bring a further decline. The government reported year-over-year growth in the October-through-December quarter of only 6.1 percent.India's growth, or lack of, will affect the smaller neighboring economies, Cowen writes.
What is disturbing is that much of the decline in the growth rate is distributed unevenly, with the greatest burden falling on the poor. If the slower rate continues or worsens, many millions of Indians, for another generation, will fail to rise above extreme penury and want. The problems of the euro zone are a pittance by comparison.
India's finance minister, Pranab Mukherjee, who is now canvassing to become the country's next president, offers an upbeat assessment, which I find hard to believe:
India was growing at over 9 per cent before the global financial crisis of 2008 pulled down the growth rate to 6.7 per cent in 2008-09. India has projected a growth rate of 7.6 per cent in 2012-13, up from 6.9 per cent recorded in the previous fiscal.Even if India records that rate of growth, there is inflation to worry about. Thus, a report like this one appears to be a lot more realistic than the ministerial pontifications.
Meanwhile, when I talked with my parents the other day, they said that electricity rates have gone up, and power cuts continue. It is a continuation of the power shortage that forced my college-mate to shut down his mill in Coimbatore. While the upward revision of the rates is a correct policy approach--one that had previously severely under-priced electricity--not much can be created without new sources of electricity, which is needed for rural and urban economic activities alike.
Not lookin' good :(