Source: CNBC Why India's reforms are different this time Leslie Shaffer | @LeslieShaffer1 26 Mar 15
Uncertainty over government-led reforms remains an overhang for India despite its promising growth outlook and surging stock market, but India’s former central bank governor says the factors for change are in place.
“India has often times failed in the past. It’s punched below its weight,” Dr. Duvvuri Subbarao, a former governor of the Reserve Bank of India (RBI), said at the Credit Suisse Asian Investment Conference Tuesday. But he believes it will be different this time as Indian Prime Minister Narendra Modi pursues reforms.
“There’s been a remarkable turnaround in the India growth story, not so much because of what the new government has done, but because of what the new government is expected to do in the next 4-4.5 years,” he said.
“For the first time in 30 years, we have a government that has no coalition pressures. It is assured of five years in office,” he said, noting the ruling Bharatiya Janata Party (BJP) also has control of state governments accounting for more than 50 percent of the country’s gross domestic product (GDP). Modi’s BJP swept to power in May of last year with a solid majority of the parliamentary seats.
Momentum is strong
India has disappointed in recent years with economic growth falling to a decade low of below 5 percent, inflation running above 8 percent and reforms stalling.
But the Asian Development Bank expects the economy will take off, growing 7.8 percent over fiscal 2015-16 and 8.2 percent in fiscal 2016-17, boosted by an easing of monetary policy and a capital expenditure recovery.
“India stands uniquely in the world today because while every other country is demand constrained, including China, India is supply constrained,” Subbarao said. With a per capita income of around $1,500 annually, “any improvement in income quickly translates into consumption and production has to catch up.”
Rural incomes have increased by around 10 percent a year for each of the last ten years, he noted.
It’s an enthusiasm for the economy that has translated into sharp stock gains, with the Sensex up 30 percent over the past year. Around 22 percent of attendees at the Credit Suisse Asian Investment Conference said they are most overweight on India’s market within Asia, the highest in the region.
Meher Baba said that India is closest to the Om Point, the place where infinite God manifests as the world of duality, and for me that the key to understanding it. Something new is always happening in India that you couldn’t predict because of the pressure of Divine Manifestation that is always there, and it includes all aspects of life.
Narendra Modi’s entire rise to power was an example of that. He was entirely unforseen and impossible from the POV of the powers who thought they had a perpetual grasp on power simply because they descended from Mahatma Gandhi who led India’s liberation from British rule. It never occurred to them that their grasp on power had something to do with actual ability to govern to the benefit of the Indian people. They failed to understand, let alone continue and build on, what the British had done right in India.
Narendra Modi has understood that, and has reversed the whole country’s reactivity abut the real demands of a modern-era government of an industrial economy. As I’ve written before, “Narendra Modi is from God.”
I am sure that there will continue to be good news from India on all fronts. Of course, there are always good days and bad days in any developmental process, but we can look forward to solid and continuous progress in India from now on.
It will be a long time before the Indian economy can be in the same league as China’s , if that ever happens. But what is already true about India, and always will be true about it, is that the processes of its economic growth are far more creative than those of China. Right off the blocks, when it comes right down to it, the entire Indian society knows intuitively not only how to attract but also how to reward foreign investment, and China has consistently used every administrative betrayal in the book to prevent that. Then how do they succeed? Flooding us with sub-standard goods produced in slave labor camps! In the long run, the sheer stupidity and ugliness of their policy will defeat Chinese economic hegemonism.
Shadows are drawn to the light. Meher Baba said that India is the spiritual leader of the world, and that has always been true, and would even be true today without Narendra Modi. The unbelievably primitive social and economic behaviors, such as gang rape, that we see in India have always been there, and will tend to be there forever. But they can be suppressed until their perpetrators are voices crying in the wilderness on the margins of a civilized nation that has repudiated their dominance forever. A robust and incorruptible police force, and a lightning-fast and thoroughly effective and punitive criminal justice system will always be among India’s greatest needs until this outcome has been obtained.
Avatar Meher Baba ki Jai,