India Uncut

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Wednesday, February 07, 2007

Getting complacent

Niranjan Rajadhyaksha warns in Mint that there is a danger that our economic growth rate will make us complacent, and blind us to the necessity of future reforms. He writes:
India is perhaps in the initial stages of a long boom that could extend over several decades. Other countries in the region have gone down the same road—and eventually emerged out of mass poverty at the end of it. Japan maintained an average growth rate of 8% between 1950 and 1980; most of the East Asian countries grew even faster between 1960 and 1995; China has been scorching the turf at 10% a year since 1994.

The danger is that this sudden growth acceleration could lead to complacency on the policy front. Economic growth has moved up a couple of notches higher without any significant economic reforms since 2004.In other words, the extra growth we have seen may be treated like an unexpected cheque in the mailbox—you get it without really trying too hard. On the other hand, the most dramatic reforms in India have always been pushed through during economic distress, be it the macroeconomic crisis of 1991 or the severe slowdown in the last years of the NDA government.
Indeed, the fact that our growth rate is so healthy could actually work against us in the long run, by allowing our political leaders, most of whom are reflexively socialist, to drag their feet on reforms.

Also in mint, my buddy Shruti Rajagopalan makes her debut with an excellent article on Singur, "Reverse Robin Hood land reform." Do read about how Jawaharlal Nehru "sold the rights of farmers in Singur decades ago in exchange for votes."

(All articles in Mint require a one-time free registration, but it's worth it: their opinion pages, in particular, justify the effort. My weekly column begins tomorrow, by the way!)
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