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Originally posted by greendragon at 2010-7-5 13:18
I seriously doubt India can use EXPORT DRIVEN GROWTH what with it's comparative advantage picture versus the Indochina-Archipelago group of nations!
At the moment, it's still at 140 giga electri ...
You seriously aren't asking me this question. India can definitely take a 'export driven growth', but indian policy makers are resisting it because they don't want to become some cheap manufacturing nation. No country has ever succeeded by making cheap products. It's the innovation that is needed. Prime Minister of India, Mr. Manmohan singh, a cambridge economist, is a visionary, he don't see india as a cheap manufacturing hub but a potent innovator. Government policy decision is to help indian private sector to achieve success and not to interfere in everything they do. Even if they want to become a manufacturing hub they would like to manufacture Indian products. Indian government is giving the opportunity to local companies to develop to a stage where they can innovate and manufacture.
Also, India cannot force people into working for $200 per month for ever and stuff 20 people into one small room. Indian government has to allow market wages to prevail. Indians are free people, they revolt and companies don't like that. Companies want subservient Chinese. Get it.
Regarding electricity, China needs that kind of power infrastructure because it wanted to become a manufacturing hub. But India doesn't need to have that kind of power as it doesn't want to become that. Its that simple. If you see India's GDP, 65% of it comes from service sector. It doesn't need much power.It has a shortage of about 30 GW, which are under construction. Whey they need more power, they'll build it. But also remember China had about 12 years of head start in globalization.
Trade deficit is natural to any economy that is domestically driven, it also means it's a healthy economy and it can sustain global shocks. Although India would like to balance its exports and imports. Deficit in current account is not necessarily a bad position for a growing economy. Growing economy runs trade deficit as it tries to add infrastructure to match growth.Also don't forget, China had to spend about $560 billion to sustain the global crisis. India only spent $36 billion to come out unscathed from recession. There in lies your trade deficit for 5 years.
Going to Inflation, India's inflation are food price driven. Food price inflation is at about 16% mainly because of poor monsoon. There is also small increase in manufacturing price, but if you look deep into it, you'll see that it is also caused by industry that processes food. This year, we are expected to have good monsoons, so by the end of the year it'll come down to 5%. Who gave you that 13% figure? Interest rate is low because government is trying accelerate growth.
Also, for a 'discouraging picture to you', Indian stocks are performing extremely well. In fact it leads in top 20 nations this year so far. How are Chinese stocks performing?
It's pretty hard for us to develop 'credible economic program' because we do not know how credible chinese figures are. we don't know if the figures put out were real or not. Chinese government gives us, we are expected to believe them. I hope for your sake they are giving out the right numbers. I and a lot of my friends at harvard have our doubts.
[ Last edited by eamanis at 2010-7-5 05:18 PM ]