" 6 percent in the 1990s and early 2000s and then jumped to 8.5 percent between 2003-04 and 2008-09. Alongside, poverty has declined as well. The proportion of those living below the poverty line fell from 36 percent in 1993-94 to 27.5 percent in 2004-05."
"One other important indicator reinforces these observations: the spread of telephones. As late as the end of March 1999, India had a total of just 23 million phones, translating into 2.3 telephones per hundred individuals. Within 10.5 years, at the end of September 2009, the two indicators had climbed up to 509 million and 43.5, respectively. Even in rural India, on the average, there now exists one phone per household. Bihar, the poorest state in India, can boast of 23 telephones per 100 individuals."
It makes me wonder what kind of tools and reforms were used in India, and how we could perhaps learn from our largest Democratic cousin.
I'm not sure the U.S should take many cues from India, we have a completely different comparative advantage. India's economy, like China's, owes a lot of its growth to manufacturing (especially textiles). The U.S. relies on its brain power. India made itself more competitive by reducing its regulation of factories, something that certainly improved their economy, but also didn't necessarily make it very equitable. As to the rise in phone use as a sign of economic prosperity, I think that is slightly silly. There are countries that are poorer than India with wide spread cell phone use. Cellular phones are popular because they don't require much infrastructure (i.e, no phone lines, and a diesel powered generator to provide its electricity, no power grid).
ReplyDeleteOne totally unsurprising quote from the article that explains how India did not suffer from the crisis as much as others: "In large part, the credit for weathering the crisis without much damage goes to Y. V. Reddy, the former governor of the Reserve Bank of India, who resisted the pressures from virtually all corners, including the Finance Ministry, to rapidly liberate the investment activity of Indian banks. Thanks to him, Indian banks had virtually no investments in the toxic assets and did not require significant infusion of capital to survive."
ReplyDeleteSomebody in the government actually looked at the proposed investments and maintained their regulations against them, shocking. Quoting further: "The present United Progressive Alliance (UPA) government has chosen to take advantage of these revenues to beef up social programs. The central plank of these programs has been the National Rural Employment Guarantee Scheme, which guarantees one member of each rural household 100 days of employment at the minimum wage."
It turns out that paying your underemployed labor force to do public work programs can lead to long-term benefits that long outlive the initial investment in terms of local transport and health, and potentially encouraging unskilled laborers to become skilled.
I think that we cannot look at India's economic growth without considering the different circumstances. India's population is much much bigger than ours and there is a larger proportion of lower class citizens who are willing to work for less money. They also transitioned from a planned economy from the government to a fairly free market. In America we have gotten into our economic mess by believing blindly in the virtues of a free market. I think the best way to learn from different economic systems is to find those that have found a common middle ground between socialistic and capitalistic economies since that is the direction America is going with state-owned banks and new health care reforms.
ReplyDeleteI think that Sean brings up a great point because one of the reasons that America is experiencing such a major crisis is the loose standards for bank regulation. Also, I think that Hannah brings up a valid point about India's citizens' willingness to work for less money than American citizens.
ReplyDeleteThe U.S. doesn't need to take cues from India because the two countries are in completely different social and economic situations. First off, India is experiencing industrialization like the Western Nations had hundreds of years ago. Furthermore, India is experiencing this growth because these jobs have been outsourced to them from the same Western Nations. Also, the quality of life is not as high in India, meaning that the actual amount of people able to get money from banks is a very small portion of people. Furthermore, India may have unregulated some things like factories, but they have not implemented social safety networks and basic living commodities which we expect here in the US. Therefore it is easier to do things at a cheaper cost because not as much capital is tied into the system as in the US, and India can implement cheap labor at an even lower cost because of a lack of social structure. So as for the resounding growth in India, it is mostly the commodities which the US already has meaning the two cases are basically not comparable.
ReplyDeleteI agree with Nick, even though they are our democratic cousins, we are very different in culture and the way we are able to change our regulations and economical tactics. I do believe we need to find a change like they did that fits us though. Whatever it may be needs to suit our nation or each individual state to initiate growth and jobs.
ReplyDeleteThey're smarter investors than the rest of the world. Good work India!
ReplyDeleteThis is good to hear that another free market has begun to flourish. Seeing India turn around and grow and get their poverty rate is a good thing. Also there economy imporving and growing means the world economy is growing and thus helps us out so any country doing well is a good thing.
ReplyDeleteThis is an inspiring story to read. Seeing another country step out of their economic hardships is good to see now days. Although this can be done by any country struggling, you still must look at the fact that every country has different circumstances. I believe that we can follow in India's footsteps, it will just take a little bit more time and different strategies.
ReplyDeleteIndia is a different place than the United States, population wise, culturally, and economically. Hannah's point is very accurate I think. And looking at Sean's post, these differences still don't seem to downplay that smart investments for the future will benefit a country more than any short term, quick-recovery scheme.
ReplyDelete