Friday, February 09, 2007

A Closer Look at India

Interesting article in IHT which raises some pointed questions on real foundation of India's economic strength. But the author does conclude he is optimistic about India in long term, but what he didn't do was to define long term.

A resurgence of Indian pride is understandable after decades when India was ignored by the Western media and viewed with disdain by fast-growing East Asia. Such a boost to national self- confidence must be of long-term benefit and create a dynamic of rising expectations.

But there are too many signs of an overconfidence that looks more and more like hubris. If suddenly deflated it could undercut the basis on which Indian optimism is built — that India can compete in a globalizing world and one day equal China in economic weight.

Enthusiasm about India's global role as a manufacturer, given its supply of labor and vast domestic market, is fine in theory, but it must be tempered by the reality of high tariffs and a huge manufacturing trade deficit. India is more dependent than ever on exports of services and raw materials, and on workers' remittances.