India ‘Looks East’ as history July 7, 2010Posted by southasiamasala in : Gordon, Sandy, India , comments closed
This paper was presented at a workshop titled ‘India Looks East’ hosted by the Australia India Institute and Institute of South Asian Studies, Singapore, at the University of Melbourne, on 4 July 2010.
India’s Look East policy was initiated out of failure: the failure of India’s Cold War strategy of ‘playing both ends against the middle’ while at the same time attempting to adopt a pro-Soviet ‘tilt’; and the failure of India’s command economy, which by 1990 had managed to command only 0.4% of world trade – insufficient to cushion India from the 1989-90 oil shock. While the collapse of the Soviet Union was no fault of India, it left New Delhi searching for an alternative set of economic and strategic approaches. The ‘Look East’ policy seemed to fit both needs.
India, however, initially had a hard job to claw its way back into those parts of Asia to its east. ASEAN itself was borne out of concern about an encroaching communist bloc and tempered in the fires of the Vietnam War. It viewed India’s still clunky economy and former Soviet bloc ‘tilt’ with suspicion. (more…)
India: inducing a slowdown through restrictive policy January 15, 2010Posted by southasiamasala in : India, Jha, Raghbendra , comments closed
Indian policymakers pride themselves on the fact that the Indian economy was able to pull out of the Global Financial Crisis (GFC) relatively unscathed with real GDP growth rate falling to 6.7% in 2008-09 as compared to the 9 per cent in 2007-08 and expected to rise above 7 per cent in 2009-10. At the onset of the GFC many commentators had expected a collapse of growth with some even predicting a return to the sluggish growth of the mid to late 1990s.
Thankfully, the Indian economy proved the predictors of doom wrong. A number of factors have been ascribed to explain this performance: high consumption in India, as compared to China, and lower exposure to the global economy, again as compared to China. High home consumption is desirable as it gives support to the domestic economy in the face of a collapse of international trade, as happened during the GFC. Additionally, lower exposure to international trade reduces the impact of external shocks. The existence of substantial controls on the banking sector is said to explain the fact that no Indian bank had to be ‘rescued’. In addition, however, credit is sometimes also given to ‘good policy design’ by the government. (more…)