High Growth Of Economy Of India & China Causing Sleepless Nights?

I always read about rapid progress of India's economy with avid interest but harboured some doubts at the same time. It excited me to imagine India being ranked the third largest economy in the world by the year 2010. Those forecasts have been made, after all, based on facts and figures; the international watchdogs and analysts corroborate the same even as I fail to get any glimpse as though the same might be taking place obscurely.
The annual deliberations between the Confederation of British Industry and the government of United Kindom, interestingly, have removed remaining doubts from my mind as I learnt who was saying what. The Chancellor of Exchequer, Gordon Brown, has warned "Over the next fifteen years, up to half the world's future growth will come from India and China. By 2020, the G-7 share of growth will fall just to one-third". I quote from The Times of India what George Osborne, the right-hand man of David Cameron, the leader of Tories had told the Confederation of British Industry - "How are we going to compete against countries with low wages and high ambitions? There are quite a lot of lazy assumptions out there that we need to confront. There's the assumption that we'll do the clever stuff and we'll move up the value chain, and leave the Chinese and Indians to do cheap things. Let me tell you no one has told them that." Paradoxically, U.K. and other developed countries are now getting scared of the economic boom taking place in India and China. As reported in Economic Times, the US treasure secretary, Henry Paulson, wailed "We cannot tell the developing countries that we benefited from free markets, but we will not allow them to do the same. It's morally wrong - we are condemning them to being a perpetual underclass."
The cat is now out of the bag. The globalisation mantra chanted for years to the developing countries like India and China for allowing MNCs and FDIs (to exploit the natural resources as well as to escape from the rigid claws of environmental controls in their own countries) has begun to backfire. The disciples i.e. India and China having mastered the mantra are now ready to take on their gurus.
I think India has to wait patiently for poetic justice to be delivered. What do you say?

China - The Unchallenged Victor

Today, China is the cynosure of the whole world being the fastest growing economy. The enviable position was attained by attracting $72.4 billion foreign direct investment (FDI) during 2005 which is one fifth of all FDIs bagged by developing economies. It has also assiduously built a foreign exchange reserve of $1 trillion. It produces and consumes one third of the world steel so much so that the entire world steel industry seems virtually to be at its beck and call. There are plenty of other examples to showcase its invincible position for China to say deservedly to the world - "I am the monarch of all I survey".
India, too, has been hogging limelight for its spectacular GDP growth rate in excess of 8% for the last three years. Though next only to China in matters of recent rapid economic progress, India remains way behind. Being part of the same race, comparisons between the achievements of two nations are often made. The two most populous nations of the world are vast and part of Asia. Perhaps the commonality ends there. The social, political, cultural and linguistic differences between them are too significant.
Yet, I find a common tendency among analysts and some determined bloggers to compare and contrast the two on any issue. We must remember that India is the biggest democracy in the world and embraced liberalisation in 1991 after much dithering. Even today, the Left parties continue to throw a spanner at times in the government's policies whenever they consider it politically expedient to do so. It is a different matter that their counter-parts in China are giving smooth passage to inviting FDIs without any let or hindrance. And whereas any development work can be delayed or stalled in India by a small group of disgruntled citizens or vested interest, there is virtually one-party rule in China.
With both the two big nations trying to attain supremacy, there can never be total cooperation and trust among them though a lot is being expected out of the ensuing visit of the Chinese President to India. While bilateral trade is expected to cross $50 billion by 2010, there are some disturbing news that China will join hands with Pakistan to claim Siachen - a strategic military location for India. There was a war over border disputes in 1962 just before "Hindi-Chini bhai bhai" slogan became immensely popular with the Indians.
The future path, therefore, ought to be traversed with caution exercising wisdom gained out of past mistakes.The bureaucracy and the political mindset seem transfixed at China. It must be realised that India started the reforms process 15 years after China had started besides having constraints in framing and implementing policies unlike China. I read an editorial in Times of India that India is trying to put a man on the moon simply because China is also gearing for the same feat. Stretching competition to such extents can be self-defeating.
Let us work determinedly even if our pace is slow reminding ourselves of the saying "Slow and steady wins the race". More importantly, India must retain its own identity and refrain from playing second fiddle to China.

Double Standards For Acquisition And FDI

After globalisation has broken all national and regional barriers, the world, today, has been reduced to a global village. Acquisitions and FDI flows from one part of the globe to the other are now so routine that nobody raises eyebrows even when a developing economy springs a surprise of investing in a developed economy or goes for acquisitions.
Tatas has made recently mega acquisition of Corus in Europe for $8.3 billion besides other Indian foreign acquisitions of nearly $10 billion made in last 5 years. Of course starting from scratch, this is considered sizable even though it is just 1 % of global cross-border deals.
I found a report published in Times of India on a survey titled 'Voice of the People,2006' conducted by Gallup International and TNS intriguing as some findings reveal how people from different parts of the world view differently the whole business of acquisitions and FDIs. I do not know why 44% of the respondents in USA responded negatively to FDI flows to their country when it is the largest investor all over the world. Similarly, the respondents from developing economies - South Africa (71%), Nigeria (76%), Vietnam (75%) surprisingly supported the globalisation.
When MNCs were trying to get a foothold in India in 1970s, Left and socialist parties had given a battle cry against them. Now that Indian MNCs are spreading wings abroad, the voice of opposition seems to have died down. Ironically, it is the turn of the Indian MNCs of defending their acquisitions abroad with promises that there would not be any job cuts after the takeovers.I think no nation can get away with double standards for acquisitions and FDIs. If it goes for acquisitions abroad and invests in other foreign countries, it is only fair that it allows others to do likewise in its homeland.
You cannot have the cake and eat it too!

Economy Riding High, So Also FDIs

Every picture of the Finance Minister of India Mr Chidambaram these days shows him wearing a generous smile. Coming from a person who is in the driving seat of the mammoth economy, it is quite understandable. Shaking off its lack-lustre growth rate of 6% in the last decade and achieving an all-time high of 8.2%, India is now in a position to flex muscles before the champion China who are still unbeatable.India's GDP has touched $750 billion by traditional method of assessment. Using the jargon 'purchasing power parity' (PPP) which finds favour with the economists, India ranks fourth largest in the world as per International Monetary Fund (IMF).
When it comes to attracting FDIs, India's performance has been even better. As against bagging $7.5 billion during the year 2005, the Finance Minister, in an interview with Reuters, sounded confident that it would reach $10 billion during the year 2006. He was candid to say that except four or five specific sectors where FDIs have still got caps, the opportunities and the projects awaiting investors are very high.
He would have scored a perfect ten out of ten but for the deficit going haywire so also the inflation. He expects deficit would be contained at 3% and high deficit as well as inflation would become history in 2008.
By then, hopefully, we may see his pictures with a broader smile.