This is an excellent article by Ambrose Evans-Pritchard, published in the Telegraph. Check it out!
As somebody who has spent nearly two months in India this year, plus many years working with Indian businesses, I very much identify with the broad thrust of the Evans-Pritchard article.
Let me declare my bias. I love India, its history and culture. It is proudly the largest democracy in the world. In the last two years, I have also spent many months in Eastern and South Eastern Asia, including lengthy periods in China. I’m also privileged in having worked in India in the 1970s, which was indeed a very dark time.
I have witnessed, first hand, India’s enormous success in technology and outsourcing services, yet even these once world-beating industries are struggling with India’s escalating costs. For me, much of India’s success has been on the back of lower unit costs but with high inflation and aggressive labor unions, India is in danger losing its way. Ultimately, there are two overarching models and India has dabbled with both. On the one hand, there is capitalism and free enterprise, fully exposed to global markets. On the other hand, there is a statist model closer to communism. Whilst India has enormous strengths in education and knowledge of English, there is unbelievable poverty, illiteracy and unchecked birth control in the lower classes. Although outlawed in the 1947 constitution, the caste system is alive and well, dominating social and cultural life.
India’s greatest strength is democracy but perhaps it is also its weakness or Achilles heal . With widespread widespread corruption highlighted by Evans Pritchard, India is strategically very weakly positioned against powerful competitors, like China.
Let me turn this to an open question:
Should India take a leaf out of David Cameron‘s book and make austerity the government’s central strategy?