It surely is India's time now fair & square

In the past, India has been global number one in starvation deaths, getting food aid, getting foreign aid, and —according to Transparency International — in willingness to give bribes. But suddenly, after two decades of playing second fiddle, analysts such as Credit Suisse predict that India will grow faster than China in 2007. A country once regarded as a bottomless pit for aid is competing for the number one position in the global growth league.

Any country can do well for a year or two in ideal conditions. India’s big achievement is that it has grown at 9% for two quarters despite several weaknesses in policy and institutions. The World Bank’s Doing Business 2006 report estimates the difficulty across countries, and ranks India 116th out of 154 countries, far worse than China (91), Sri Lanka (75), Bangladesh (65) or Pakistan (50).

Enforcing contracts in India takes an average 1,420 days and involves 56 different procedures. Importing goods takes 41 days and 15 documents. Starting a new business takes 35 days of slogging. Tax payments have to be made 59 times a year and the process takes 264 hours.

Transparency International’s Perception of Corruption Index ranks India 83rd out of 133 countries, a sad commentary on our venality. Better for India is the World Economic Forum’s Global Competitiveness Index, which places India at the 43rd position out of 125 countries, ahead of the other BRIC countries (China, Russia and Brazil). But 43rd is a long way from number one.

The world economy is booming today, and lifting all boats. The average growth rate for developing countries is 7%, and even Africa has averaged 5.3% for four years. In such buoyant conditions, achieving 8-9% growth is less impressive than it would have been in the 1990s.

So, is India’s fast growth a flash in the pan, as in the mid-1990s? No, not at all. India is now more integrated with the global economy than ever before, and is becoming the senior partner in such integration. That represents a paradigm shift.

In the last three years, the ratio of exports of goods and services to GDP has shot up from 14.6% to 20.5%. India’s share in global merchandise exports has doubled from 0.5% in 1990-91 to 1%. Its share of global services exports too has doubled in just the last two years to 2.5%, and politicians in the US and Europe are petrified that India will grab millions of jobs from their countries.

Also, India’s growth of nominal GDP has been rising for three years at an astonishing 16% per year in dollar terms (the rupee has strengthened against the dollar). If this rate can be sustained, says Prof Arvind Panagariya, then in just 22 years India will equal the US’ GDP of $11 trillion in 2050!! Nothing remotely similar could be said of earlier business cycles.

Source : Economic Times