Razeen Sally

European Centre for

International Political Economy (ECIPE)
London School of Economics (LSE)

GLOBALISATION AND INDIA SHINING

a) Snapshot
-- Macroeconomic conditions
-- Trade and foreign investment (FDI)
-- Financial markets
-- Domestic business climate
-- Politics and the state
-- Comparisons with China

GLOBALISATION AND INDIA SHINING

b) Prospects
-- Politics, economic policy, the business climate
-- Comparisons with China

c) Focus
-- States and cities
-- Higher education

GLOBALISATION AND INDIA SHINING

History (1947-91)
-- From Fabian socialism to Soviet-style central planning
and the license raj
-- Foreign policy: nationalism, non-alignment and the
Soviet Union as First Friend
-- The economy: a Hindu equilibrium

GLOBALISATION AND INDIA SHINING

Market reforms, 1991-- Half measures in the 1980s
-- The 1991 crisis and big-bang reforms (1991-93)
-- Gradual, stop-go reforms (1993 to present)
-- The state of play

GLOBALISATION AND INDIA SHINING

Reform results
-- Massive changes: opening to the world,
transformed business landscape, IT
powerhouse, emerging world-class firms
-- But lopsided growth: benefits urban middle
classes but not the vast majority of the poor
unlike China

GLOBALISATION AND INDIA SHINING

Reform gaps
-- Unreformed agriculture
-- Lack of labour-intensive manufacturing and throttled
labour markets
-- Overregulated, underperforming services sectors
-- Remaining trade and FDI barriers
-- Remaining capital controls
-- The unreformed Indian state

GLOBALISATION AND INDIA SHINING

Politics
-- The most difficult country to govern: vast, hugely
diverse, split so many different ways
-- Messy democratic politics: multi-party coalitions at the
centre; kaleidoscope of musical-chair politics in the
states
-- But advantages (compared with China): unity and
stability; checks and balances; British-endowed liberal
institutions; the English language; political and civic
freedoms

GLOBALISATION AND INDIA SHINING

Focus (1)
-- The states in a federal system
-- Growth engines in the south and west (with outliers)
-- Policy reforms and business transformation: e.g. Tamil
Nadu, Karnataka, Andhra Pradesh, Maharashtra,
Gujarat, Punjab, Haryana
-- Key sectors, NRIs and FDI
-- Transformation of India: a bottom-up, not a top-down
story

GLOBALISATION AND INDIA SHINING

Focus (2)
-- Indias expanding demand for higher (and
lower) education: insufficient, low-quality
supply; foreign investment prospects;
reform hurdles

GLOBALISATION AND INDIA SHINING

Prospects
-- The big picture: the new Asian Drama
-- Asias transformation of the world economy: much more
competition; gains for the West and the Rest; but more
difficult adaptation required; wider inequalities; the
middle-class squeeze; the middle-income trap
-- Role of India in the new Asian Drama

GLOBALISATION AND INDIA SHINING

Prospects (cont.)
-- Lou Dobbs is wrong: stupid economics; bad business
logic; noxious politics
-- Lessons for policy: contain protectionism; constructive
economic engagement; strategic foreign-policy
partnership