Don’t waste a crisis

So busy are our policymakers with their political grandstanding and permutations that are currently underway in India that they are missing the fact that a chain of international political events currently underway in Asia present opportunities that, if harnessed deftly, can lead to many long-term benefits for our nation.

Tensions between Japan and China, over the set of islands they call Senkaku and Diaoyu respectively; political unrest in the Middle East; economic uncertainty in Asian investment poster boys such as Vietnam, Thailand and the Philippines; a rising aversion of the Chinese to foreign companies (described by a popular international news magazine as the "New Great Wall") and the commotion concomitant with democracy's birth pangs in many nations in the Arab world means that most of Asia is in serious crisis. These are precisely the sort of events that unnerves foreign investors.

Under such circumstances, India has a golden opportunity to present itself as an ideal destination for global investors. It is not that India's attractiveness was ever in doubt. The advantages of a large population, a burgeoning middle class and propitious demographics have been well documented. But at the same time, there is a feeling that Indian policymakers have come to take India's appeal to investors and GDP growth for granted. This was most evident in the statements of some leading politicians whereby they would dismiss the decline in India's GDP growth with callous comments, such as, "We are still doing better than the rest of the world."

An aspect of this tendency has been brilliantly presented by Ruchir Sharma, a top executive of Morgan Stanley Investment Management, in his acclaimed book Breakout Nations, wherein he cogently argues that the famed inhabitants of the BRIC acronym need not necessarily enjoy the sort of growth being predicted by an almost naïve extrapolation of recent economic performances. Sharma goes on to point out that the United States and Europe may not be doomed to perennial aversion of investors as some commentators have predicted, and says Arab economies could well turn out to be dark horses.

... contd.

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