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India: an emerging power? Mritiunjoy Mohanty IIM Calcutta IEIM, UQAM.

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Presentation on theme: "India: an emerging power? Mritiunjoy Mohanty IIM Calcutta IEIM, UQAM."— Presentation transcript:

1 India: an emerging power? Mritiunjoy Mohanty IIM Calcutta IEIM, UQAM

2 Preview There is no necessary convergence of interests between USA and India Whether India becomes a new power will be depend upon how it copes with internal and external challenges Indeed coping with these might lead to divergence of interests And new coalitions

3 The upside: growth and take-off Economy growing at nearly 9% over the last four years, i.e., from 2003/4 to 2006/7 Will probably maintain that this year Per capita income growth has more doubled Currently at 7.1%, as compared with3.4% experienced during the 1980s and 1990s







10 Investment and savings ratios in the low 30s, which would seem the requirement for modern take-off Domestically financed, CAD in the range of 2% Increased inflows of capital Huge increases in inward market-seeking FDI in the last 4 years Rising accretion of reserves Sustainable macroeconomics

11 Private Capital Indian private capital finally came of age, showcasing itself in the $12 bn takeover of Corus by Tata Steel, catapulting it no.5 globally Tata Motors, currently no.2 in india in cars, frontrunner in the bidding for Ford brands Jaguar and Landrover Corporate india on a global buying binge Outbound FDI now almost equal to inward FDI. Next year it is predicted to be higher

12 Public Sector A public sector renaissance Partial privatisation Privatisation stopped because of political and union resistance On 21 st Jan 2008, 7 public-sector firms in Top20 by market capitalisation and 14 in the Top50 End of 2000, there were 5 in the Top20 (one of which has been sold) and 8 in the Top50

13 Science and Technology India’s science and technology, seems finally to find its feet. In January 2007, ISRO successfully recovered an orbiting satellite. It is a technology that only China, the EU, Russia and the USA possess. In April 2007 ISRO commercially launched and Italian scientific satellite Agile into orbit and entered the international satellite launch market. Two days ago commercially launched an Israeli spy sattelite. Successful launch of the Geosynchronous Satellite Launch Vehicle, (GSLV-F04), which placed a 2-tonne communication satellite, INSAT-4CR into orbit. Successfully tested an indigenously made cryogenic engine to power GSLVs Indian made super-computer ranked in the top-10 in the world

14 The international stage Major player in the Doha Round of WTO negotiations Important G24 member: coalition of shared interests Expanded G8 The Indo-US nuclear deal and the recognition of India nuclear power without signing the NPT The distancing from Pakistan “convergence of interests” Increase in strategic value – an emerging power

15 The downside Internal Unsustainable inequality Agrarian crisis and land hunger Poor quality of jobs Caste inequality related violence External Unstable South Asian neighbours China

16 Unsustainable Inequality the gini coefficient has gone up from 32.9 to 36.2 between 1993-2004 Over the same period, the bottom 20% per capita expenditure has grown at 0.85% p.a. while the top 20% has grown at 2.03% p.a. In China the comparable statistics are 3.4 and 7.1% That is China’s bottom 20% expenditures rise 4 times faster than India’s. It is this lack of growth at the bottom which makes increasing inequality potentially unsustainable

17 …. because An unprecedented agrarian crisis of livelihoods, income, employment and profitability has beset rural India for more than a decade 86% of India’s workforce is employed in the informal sector, the bulk of whom have gained little from the rapidly growing economy. Almost 97% of new non-agricultural jobs created between 2000-05 in the informal sector. 88% of Dalits and Adivasis population, 80% of Other Backward Castes (OBCs) and 84% of Muslims belong to the “category of the poor and vulnerable”. These groups constitute roughly 75% of the population five years later, victims of the Gujarat pogrom still live in refugee camps and have not been able to return home and there has been no calling to account

18 … and therefore Land related violence The resurgence of armed left-wings groups Caste related violence Not just social but political as well In November 2006, a poor Dalit agricultural worker who had been elected the president of village panchayat in Tamil Nadu, was killed because he refused to oblige his deputy, an “upper-caste” vice-president, and become a rubber-stamp president.

19 Unstable neighbours Pakistan Bangladesh Sri Lanka Nepal Burma

20 Economies have fared well

21 Democracies and polarisation: Bangaldesh and Sri Lanka “Convergence of interests”: Pakistan Nepal Burma China

22 Deepening of democracy and lower caste political mobilisation … Affirmative action in politics ensured that there were seats for socially disadvantaged groups (including lower castes) in all publicly contested elected bodies, from the parliament downwards to now the panchayat. Politics of affirmative action – lower caste mobilisation around quotas Upper caste response – politics of religious identity It is this political mobilisation and the consequent access to political power that probably explains one of the most truly remarkable aspects of India’s democracy – that in India it is the poor and not the rich who are more likely to vote

23 …. new players and tradeoffs India’s first low caste (Dalit) chief minister at the head of Dalit majority government Changing elites – the rise of the urban bourgeoisie and the middle class Eclipse of the rural bourgeoisie Deepening agrarian crisis and caste conflict Agrarian crisis and financial liberalisation Tradeoffs - land reforms will not be supported by rural bourgeoisie Tradeoffs - non-agricultural employment for reducing poverty – rural biased growth strategy will not be supported by urban bourgeoisie

24 The 2004 defeat of the BJP-led coalition The coming of the Congress-led UPA Rural employment guarantee scheme Doha: defensive interests Power of the urban bourgeoisie Continuing agrarian crisis Resistance to Indo-US nuclear deal Pragmatic India and stable neighbours No necessary convergence A new coalition of interests

25 Thank You

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