How to get India moving again
The Economist - Apr 20th 2013
INDIA needs more market liberalisation to promote economic growth. A few
years ago, with its economy expanding at an annual rate of nearly 10%,
there was talk of India one day rivalling China, or even overtaking it.
But policymakers have grown complacent. They assumed rapid growth would
continue, but did nothing to foster it. The result is that India now
putters on at less than half what it could achieve. Investors are
anxious and the politicians are bickering.
In their new book Jagdish Bhagwati and Arvind Panagariya, both
economics professors at Columbia University, outline a series of
measures to boost growth. “Why Growth Matters” is a blunt book; almost a
manifesto for policymakers and analysts. It explains how rapid
expansion has brought India immense gains, and why more change is
needed—and needed soon. Both men are champions of globalisation and they
hope their ideas will stiffen the resolve of India’s leaders.
What they have to say is convincing. Increasing growth rates over the
past couple of decades lifted some 200m Indians out of poverty. That is
an immense gain. In 1978, say the authors, more than half of all
Indians were below the poverty line; today it is roughly a fifth.
Gradually even those politicians who put their trust mostly in
redistribution and the early roll-out of welfare grasp that a bigger
economy means more resources to share around.
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