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Realising India’s economic potential July 19, 2015

Posted by nishankmotwani in : Guest authors, India , comments closed

Peter Drysdale

India is a very large labour-abundant economy with a rapidly growing workforce and its manufacturing sector might be expected to be the primary driver of its economic growth. In fact, the manufacturing sector has contributed little to income growth and its share in total merchandise exports has been declining, as recent OECD analysis points out. Manufacturing has not brought much new employment, and most of the recent rise in manufacturing employment has been in the informal sector.

EAS India labour

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India–US relations face hurdles March 1, 2015

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Dr Biswajit Dhar

Economic relations between India and the United States seem to be going well. This was recently reinforced in New Delhi with Prime Minister Modi and President Obama endorsing the India–US Delhi Declaration of Friendship. But beneath the friendly joint statement of a new economic partnership lie considerable differences on critical issues of economic significance. These hurdles need to be overcome in order to strengthen bilateral relations.

PM Modi and President Obama

India has repeatedly voiced concerns that its IT-driven services sector faces several barriers to entry into the US market. And recently proposed policy changes are threatening to exacerbate the problem. India has consistently raised these issues with the World Trade Organization (WTO), but its demand for a less restrictive regime for service providers has failed to cut any ice with countries like the US. (more…)

India will never become a superpower September 20, 2013

Posted by nishankmotwani in : Guest authors, India , comments closed

Lawrence Saez

The end of the Cold War and the era of “unipolar” US dominance that followed has led many to wonder about the future of international power. Who will rival, or perhaps even replace, the US?

At least one obvious candidate has emerged. Although it would be premature to categorise China as a global superpower, it is quickly developing into the US’s most plausible challenger. But in discussions of globally important matters – Syria, financial crisis, the NSA fallout and so on – one name is curiously absent: India.

When the dust settles on a rearranged global system, might India also become a global superpower? My answer is no.

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Back to the drawing board as ‘shining’ India stumbles September 18, 2013

Posted by nishankmotwani in : Guest authors, India , comments closed

Anthony D’Costa

The news of “shining” India spiralling downward is everywhere. With estimated growth rates halved from the highs of 9% on average in the last decade, and the rupee tumbling, the luster of the “new” India seems to be a maya, an illusion.

Worse, the economic “miracle” no longer seems to work. The Indian “dream” has become distant for the stirring, aspiring middle class households, given the paucity of employment opportunities, made worse by the lack of relevant skills for the twenty-first century.

For many long-time India observers, including myself, there was no miracle, if by that we mean something unexplainable or the handiwork of the divine. India as a society and as a nation was on the go well before the vaunted economic reforms of 1991.

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Chinese “Blue Book” optimistic on Indian future May 27, 2013

Posted by nishankmotwani in : By contributor, By country, Future Directions International, Guest authors, India , comments closed

Daniel Barnes

The first Chinese “blue book” on the state of India has expressed concern over a government in ‘serious crisis’, but also believes India will emerge stronger after conquering its current obstacles.

Background

Chinese think tanks release “blue books” every year on numerous issues; the books have tacit backing by the Chinese government, even if they do not fully represent its views. The “blue book” on India runs to over 300 pages and was compiled by Yunnan University, which hosts one of China’s biggest South Asia programmes.

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Creative destruction: Schumpeter, Shiva and the great Indian mobile phone October 19, 2012

Posted by southasiamasala in : Doron, Assa, India, Jeffrey, Robin , comments closed

Assa Doron and Robin Jeffrey

To explain the unnerving and unstoppable march of capitalism in the mid-20th century, Joseph Schumpeter coined the term ‘Creative Destruction’. Capitalism’s engine was fuelled by a voracious impulse to devour yesterday’s commodities and thus clear the way for new products for the insatiable appetite of the consumer to feed on.

In India, ‘Creative Destruction’ once referred to the cosmological realm occupied by the King of Dancers, Shiva-Nataraj, whose continuous dance of creation and destruction governs the universe. In Nehru’s newly independent India, the idea of inducing consumption for the sake of updating to the newest model was almost sacrilege. During the first few decades of independence, material pursuits were frowned upon, while progress and industrialization were founded on ideals of self-sufficiency and self-reliance.

Mobile repair shop in Lucknow's bustling Hazratganj (Credit: A. Doron)

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Mauritius under pressure from India to amend taxation treaty September 24, 2012

Posted by nishankmotwani in : By contributor, By country, Future Directions International, Guest authors, India, South Asia - General , comments closed

Leighton G. Luke

India and Mauritius are yet to agree on changes to the double taxation arrangements that have seen New Delhi miss out on tax revenues of up to US$600 million annually.

Background

Concerned at the amount of tax revenue lost to Mauritius-based companies under existing arrangements, India is continuing to seek a renegotiated taxation treaty with the island state. Indian officials have estimated that the “Mauritius route” results in the loss of some US$600 million in tax revenues each year.

Foreign Ministers of Mauritius and India

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The archeology and anthropology of a failed investment August 29, 2012

Posted by nishankmotwani in : Guest authors, India , comments closed

Patrik Oskarsson

During PhD fieldwork in 2008 land acquisition was taking place from farmers at Srungavarupu Kota (S Kota) of Vizianagaram District in Andhra Pradesh for an alumina refinery proposed by Jindal South West (JSW), part of the Indian big business Jindal Group. About 1,200 acres in total were required for the refining plant, its waste ponds and other parts. While some of the farmers at the time were refusing to sell their land most had already agreed, or been forced to agree, to the plans of what at the time seemed a well-funded private industry being established with significant government help. Vast areas of cashew plantations had been acquired and cleared at the time while some of the owners of rice and sugarcane fields were holding out for better compensation.

Acknowledgement: Patrik Oskarsson

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Financial reforms should have a macro-economic growth perspective April 23, 2010

Posted by southasiamasala in : Guest authors, India , comments closed

Guest authors: T A Bhavani and N R Bhanumurthy, National Institute of Public Finance & Policy

This article first appeared in The Financial Express 2 April 2010.

The global meltdown has brought the focus back on the financial sector’s role in the overall economic activity. In India, where the financial sector is considered to be overly regulated, the issue of financial sector reform was brought forward and debated extensively. Two important committees, set up in the per-crisis period and headed by Raghuram Rajan and Percy Mistry, made a number of policy suggestions to improve and expand the role of the sector. Although these suggestions may be re-looked in light of the drastic changes in the international markets, the issue of financial access/inclusion needs to be the focus of any furthering reforms in India.

We understand that the financial sector reforms were aimed at bringing down costs and risks involved in providing financial services and thus, widening access of institutional credit to the production agents. Based on the macro data, one can infer that the policy changes since 1991 has indeed brought down costs and risks over the period, although it is still higher in comparison with the advanced countries and emerging market economies. However, the policy changes have not achieved the intended results in enhancing formal financial access to production activities and are quite far in removing involuntary financial exclusion as it appears from the policy discussions and also from official committees (including Rangarajan Committee). At this stage, an assessment of the extent of improvement in financial access is quite pertinent for future policymaking.

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India’s new foreign trade policy: old wine in new bottles October 8, 2009

Posted by southasiamasala in : Guest authors, India , comments closed

Guest author: Nabeel Mancheri, Hiroshima University

This article first appeared in East Asia Forum

The recently released new five-year national Foreign Trade Policy (FTP) of India has set a few objectives. Given the current financial crisis, it is also intended to provide a confidence boost for the export market. Its objectives are ambitious. Fiscal incentives, institutional changes, procedural rationalisation, and enhanced market access across the world, as well as the diversification of export markets are the trust areas mentioned in the document.

However, the document doesn’t provide any new thoughts and lacks any bold initiative in terms of longer term objectives. It is the same old type of bureaucratic exercise that the Commerce Ministry has been carrying out for decades.

The continuation of the same old policies, such as targeting a set of trade or export goals, mentioning a few sectors of importance and reshaping fiscal packages is as flawed as past approaches.

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