India needs to be reimagined again

Regimagining India is a book with 60 prominent authors. Each writes a chapter.

Several are very good. I like Ruchir Sharma, head of Morgan Stanley’s Emerging Market equity and author of Breakout Nations in Search of the Next Economic Miracles. Ruchir puts the India situation in context of other emerging and developing economies.

India began to grow at a reasonably fast rate since the early 1990s.
India’s per capita income is still just $1500.
Since the 1980s India has had just 1-2% more GDP growth than the emerging market average (It is standard for emerging market countries at low income levels like India. It was impressively consistent).
China had 4-5% more growth than the emerging market average for 35 years. (China, Taiwan, South Korea and Japan had multi-decade performance at that level)

India has been typical of most other developing countries, which reform only in a crisis and fritter away gains when things are going well.
In India, the boom-crisis-reform cycle has been shown since the 1970s.

Democracy is not an excuse. Poland and Czech Republic were able to achieve consistent reforms.

Others claim India can’t reform because the people are not disciplined and predictable like eastern europeans. Economists wrote off the Confucian society of Mao during the 1960s as well.

2000s were great for India but it was great for all emerging economies because of easy money from the US and Europe. It was a global boom and not managerial genius from New Dehli.

Only a third of emerging economies grow faster than 5% in any given decade. Over time they are not catching up but only keeping pace with the rich economies.

Breakout nations compares other nations in a similar income bracket.
He does not use grouping like BRICs based on large population size. Those groupings work well in boom times but not when markets are not making a herd movement.

India’s growth was about 4.7% in 2013. India needs to over 7% GDP growth to breakout from its peer group.
Most of the growth forecasts India’s for 2014 and 2015 are about 5-5.5%.
Brazil had premature and excessive welfarism. China did not.
India has rampant cronyism.
Don’t cling to the hope about demographics.

India needs to solve basic issues of fixing public health with affordable and effective programs while making the reforms for high growth.

Billionaires out of technology, consumer and other positive sectors are a good indicator. China has a reasonable number of billionaires for an economy of its size.

Billionaires from mining and real estate are from government connections.

India needs more state power and reform.

China had a consistent reform agenda and India needs that as well.

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