India, the enternal land of the future

David Seaton's News Links
Anyone who knows and loves India is always impressed by the intelligence and talent of her people, but often at the same time skeptical of their steadiness. They have an explosive addiction to overdecorating everything, even their hopes and fears. They seem to be all full of the joy of expression, of fantasy and imagination.... even down to their bookkeepers.

They have little of the down to earth, "eat, drink, man, woman", pragmatism of the Chinese. And they have not done enough to educate and elevate their masses. They depend too much on a tiny elite of scientists and engineers, which is in contradiction with their being "the world's largest democracy". The enormous, illiterate, voting, masses of India are resentful and restless. The new middle class could turn out to finally be the "new British". DS

Philip Bowring: A closer look at India - International Herald Tribune Abstract: I've been bullish on India for the past 17 years, but now I'm nervous. One does not need to be in the country to be deluged by "India rising" triumphalism. The BBC World Service is providing an endlessly repeated series on the subject. Morgan Stanley's star economist Stephen Roach has followed the crowd and returned from the subcontinent with "great enthusiasm" for the "magic of its entrepreneurial spirit." Fortune magazine advises us to look out for more multibillion-dollar acquisitions by globalizing Indian companies.(...) 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. The hype about ethnic Indian talent is a reminder that a decade ago much the same thing was being said of ethnic Chinese. Back then, the world was caught up in the "miracle" of Southeast Asian growth, fueled, it was said, by the business skills and networks of overseas Chinese. Success was attributed to the culture of Confucius, who believed in a hierarchical society directed by a wise elite. "Asian values" were equated with Confucian ones. The "global Chinese" story — while not a myth — was overblown and finally punctured by the Asian economic crisis. There are other reasons to worry now about the India hype. It is all very well for Indians to express racial pride over the success of Mittal in gaining control of European Arcelor to become the world's biggest steelmaker. But why, it might be asked, has the Indian-born, London-dwelling Lakshmi Mittal invested so little in India itself? And where would India be if its markets were as open as those of Europe, an openness which enabled Mittal to buy Arcelor?(...) Indian companies are investing more overseas than foreigners are investing in India. Of course some acquisitions are in fields where India does lead — software and generic pharmaceuticals. Some are driven by business logic. But others do more to swell Indian pride than boost the Indian economy. At home, Indian investors have been helped by an unsustainable rate of growth in bank credit — 20 percent last year. The fact is that India remains a capital-short country. The growth of its gross domestic product has been stimulated by a rise in the investment rate from around 25 percent of GDP to 30 percent. But even more is needed to sustain growth, and even the present rate may prove hard to maintain when global conditions become tighter. As it is, India's private-sector savings surplus has fallen sharply while the public-sector deficit remains very high. The serious deterioration now occurring in the current account will probably crimp India's growth, push interest rates back up and prick the stock bubble. READ IT ALL