Zakaria: Is India the broken BRIC?

[ChinaToday]

Last week marked exactly 10 years since the term BRIC was coined. The catchy acronym for Brazil, Russia, India and China used to describe the new powerhouse emerging markets. But the man who invented the moniker now says one of the four has been a great disappointment. No, not Russia, with all its recent troubles; not Brazil, whose economy contracted in the last quarter; and certainly not China, which continues to power on.

Goldman Sachs' Jim O'Neill says that the country that has been the biggest letdown has been India. He pointed out last week that India's inability to attract foreign investment could actually lead to a balance of payments crisis. From BRIC to basket case, "What in the World?" is going on?

Well, some numbers tell a troubling story. Growth has dipped below 7% for the first time in two years. The Indian rupee is Asia's worst performing currency this year, falling to a historic low against the dollar.

India's deficits are soaring and funding is drying up. India received less than $20 billion in foreign direct investment in the first six months of 2011. China got three times that amount. Even Russia, with the smaller GDP, took in more.

Why is India struggling? Sadly, the real problem isn't economics. India has a very dynamic private sector - probably the most dynamic in the emerging markets. But it has a government that simply doesn't work.

And it's not for lack of knowledge. India has the know-how. The government is, after all, led by a reform-minded world-class economist, Prime Minister Manmohan Singh. The problem is politics. The world's largest democracy seems to be paralyzed.

Singh's government recently announced a plan to open up India's retail sector to foreign investors, a continuation of the reforms that jump started the economy 20 years ago. The proposal would have made it easier for big Western chains like Walmart to set up shop in India.

Now, Indian agriculture is hugely inefficient. Middlemen take huge cuts, and because supply chains are inefficient, up to a third of farm products, vegetables for example, rot before they reach the market. So the Walmart model would transform India's agriculture and its retail sectors. It would empower farmers, lower prices for consumers and create huge gains in productivity.

But it was not to be. India's opposition turned this into a story of the big guy fighting the little guy, Walmart versus the mom and pop. Parliament was gridlocked for days, and politicians mobilized mass demonstrations. Small stores across the country were kept closed in protest.

So, what does the government do? Instead of standing firm, it backtracked and canceled plans to reform the retail sector altogether.

This is a depressingly familiar pattern. For two years now, India's government has done nothing, hanging on to power, presenting no plans to open up the economy, raise living standards, build infrastructure or attract new investment.

In the West, India's leaders sell the story of a dynamic, "Incredible India." But, at home, they pander to populist protectionist sentiment, dole out subsidies and do basically nothing. That paralysis is hurting the economy.

India's blessing and curse is that it has a messy, chaotic, decentralized democracy. Unlike China, it has no unified sense of direction. But the prevailing view has often been that when the going gets tough, New Delhi gets its act together. That's what it did 20 years ago when it was on the brink of default and a balance of payments crisis. Well, once again, it's time for urgent reform.

New Delhi has for years expressed pride in being part of the BRICs. If it doesn't get its act together, 10 years from now people might still be praising the BRICs, except that the "I" in BRIC might stand for Indonesia, not India.

Zakaria: Is India the broken BRIC? – Global Public Square - CNN.com Blogs

 

[PakShah]

In fact this whole idea of bric is complete trash.

Even educated Indians have realized this.

China and India have territorial disputes.

bric can never be able to form a bloc against the west.

Also geographically Brazil is far away from Russia and China.

Of course Brazil has more in common with Russia and China in sense that Brazil is not a "western country" like America or a country like Western European countries.

There will be much cooperation between China, Russia, and Brazil, however India is the odd-ball of brics.

In fact brics is nonsense.

 

[-indian2-]

yes our great Government is just F**king at the center as the article highlights....whatever growth digits we may acheive this year its all due to the people and a dynamic private sector....eagerly waiting for 2014 to get this government out.....

 

[lem34]

In fact this whole idea of bric is complete trash.

Even educated Indians have realized this.

China and India have territorial disputes.

bric can never be able to form a bloc against the west.

Also geographically Brazil is far away from Russia and China.

Of course Brazil has more in common with Russia and China in sense that Brazil is not a "western country" like America or a country like Western European countries.

There will be much cooperation between China, Russia, and Brazil, however India is the odd-ball of brics.

In fact brics is nonsense.

I agree the bric nation concept also ignores countries like turkey which it could be argued should have been included.

 

[-indian2-]

In fact this whole idea of bric is complete trash.

Even educated Indians have realized this.

China and India have territorial disputes.

bric can never be able to form a bloc against the west.

Also geographically Brazil is far away from Russia and China.

Of course Brazil has more in common with Russia and China in sense that Brazil is not a "western country" like America or a country like Western European countries.

There will be much cooperation between China, Russia, and Brazil, however India is the odd-ball of brics.

In fact brics is nonsense.

Yes we have very less co-operation with them as highlighted by the following links
India gets its way as UN climate summit ends in Durban - Economic Times
India, Russia sign deal for another 42 Sukhoi combat planes - Economic Times

 

[T90TankGuy]

yes our great Government is just F**king at the center as the article highlights....whatever growth digits we may acheive this year its all due to the people and a dynamic private sector....eagerly waiting for 2014 to get this government out.....

what do you expect the government to do ? every economic policy of theirs is blocked by the opposition , that too just for the sake of it . with no valid reasoning . they refuse to let parliament function . the opposition leaders are talking more on news channels than in the parliament, where they are supposed to bring out issues and debate it .

 

[-indian2-]

In fact this whole idea of bric is complete trash.

Even educated Indians have realized this.

China and India have territorial disputes.

bric can never be able to form a bloc against the west.

Also geographically Brazil is far away from Russia and China.

Of course Brazil has more in common with Russia and China in sense that Brazil is not a "western country" like America or a country like Western European countries.

There will be much cooperation between China, Russia, and Brazil, however India is the odd-ball of brics.

In fact brics is nonsense.

Yes we have very less co-operation with them as highlighted by the following links
India gets its way as UN climate summit ends in Durban - Economic Times
India, Russia sign deal for another 42 Sukhoi combat planes - Economic Times
:cofee:

 

[kawaraj]

Indonesia is resiliant in reforms. And its economy is more efficient and flexible, more, its government in this department is functional.

I would say on the other hand GS is starting to short India. Be wary, it's a sign.

 

[-indian2-]

what do you expect the government to do ? every economic policy of theirs is blocked by the opposition , that too just for the sake of it . with no valid reasoning . they refuse to let parliament function . the opposition leaders are talking more on news channels than in the parliament, where they are supposed to bring out issues and debate it .

Do you think Government isnt doing anything in the economic front????Except giving lame excuses????dont you see these opposition protests are due to enormous corruption under the regime....whatever it be i stand with the majority of the Indians that this Government isnt doing much for the betterment of the nation....

 

[tamygu]

They should have used broken inddian map on that brick wall.that would have been the apt demo of it.

 

[ChinaToday]

Do you think Government isnt doing anything in the economic front????Except giving lame excuses????dont you see these opposition protests are due to enormous corruption under the regime....whatever it be i stand with the majority of the Indians that this Government isnt doing much for the betterment of the nation....

This is the same government you guys so admired and praised not so long ago, and corruption in india is there long before this government was elected. The problem is the political system in india and if you dont get that fix who ever come to power in next election will do exactly the same thing as the previous government.

 

[T90TankGuy]

Do you think Government isnt doing anything in the economic front????Except giving lame excuses????dont you see these opposition protests are due to enormous corruption under the regime....whatever it be i stand with the majority of the Indians that this Government isnt doing much for the betterment of the nation....

do you belive that corruption exists only with the ruling party? at least try to read between the lines . and never go with the flow , reason look at facts then take the direction you wish .

 

[sss112]

People have said a lot of things about India since its inception [starting with non other than Churchill].

And we have happily proved all of them wrong.
The condition now is that we are not moving ahead at a pace we are capable of.
Certainly not moving backwards. If it were so, we would have seen some drastic moves here with the opposition also supporting the govt.
Currently, for all the parties, the local issues seem a lot more important than the development ones [as we have seen time and again]. Being a democracy, we cannot ignore those issues.
Our country, our issues and we are capable of solving them. And we will.

Don't want to start a troll fest so no comments to our dear neighbors' posts.

 

[gubbi]

Actually, this article is in support of letting Walmart open its retail outlets in India. If you guys do not know, the whole issue revolves around Walmart retail stores. However considering the Indian market, dependent on small vendors and locally produced goods, may not be that welcome to Walmart which sources its merchandise mostly from China and we all know how Indians consider Chinese made goods. Not to mention the detrimental effects it might have on local cottage industries.

I for once, do not support Walmart's entry in Indian retail sector. Period. Its a rampaging behemoth which devours everything in its path!

 

[artie]

no way. The brocken brick is definitely the China. Since it's a communist regime, it's ridiculous to put it with three democracies.