Why Does India Lag So Far Behind China?
Indian mainstream media headlines suggest that Pakistan's current troubles are becoming a cause for celebration and smugness across the border. Hindu Nationalists, in particular, are singing the praises of Indian Prime Minister Narendra Modi and some Pakistani analysts have joined this chorus. This display of triumphalism and effusive praise of India beg the following questions: Why are Indians so obsessed with Pakistan? Why do Indians choose to compare themselves with much smaller Pakistan rather than to their peer China? Why does India lag so far behind China when the two countries are equal in terms of population and number of consumers, the main draw for investors worldwide? Obviously, comparison with China does not reflect well on Hindu Nationalists because it deflates their bubble.
|Comparing China and India GDPs. Source: Statistics Times|
|Top Patent Filing Nations in 2021. Source: WIPO.Int|
|India's Weighting in MSCI EM Index Smaller Than Taiwan's. Source: Nikkei Asia|
The US Commerce Department is actively promoting India Inc to become an alternative to China in the West's global supply chain. US Commerce Secretary Gina Raimondo recently told Jim Cramer on CNBC’s “Mad Money” that she will visit India in March with a handful of U.S. CEOs to discuss an alliance between the two nations on manufacturing semiconductor chips. “It’s a large population. (A) lot of workers, skilled workers, English speakers, a democratic country, rule of law,” she said.
India's unsettled land border with China will most likely continue to be a source of growing tension that could easily escalate into a broader, more intense war, as New Delhi is seen by Beijing as aligning itself with Washington.
In a recent Op Ed in Global Times, considered a mouthpiece of the Beijing government, Professor Guo Bingyun has warned New Delhi that India "will be the biggest victim" of the US proxy war against China. Below is a quote from it:
"Inducing some countries to become US' proxies has been Washington's tactic to maintain its world hegemony since the end of WWII. It does not care about the gains and losses of these proxies. The Russia-Ukraine conflict is a proxy war instigated by the US. The US ignores Ukraine's ultimate fate, but by doing so, the US can realize the expansion of NATO, further control the EU, erode the strategic advantages of Western European countries in climate politics and safeguard the interests of US energy groups. It is killing four birds with one stone......If another armed conflict between China and India over the border issue breaks out, the US and its allies will be the biggest beneficiaries, while India will be the biggest victim. Since the Cold War, proxies have always been the biggest victims in the end".
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ndia is also worse off than neighbors like Nepal, China, Bangladesh, Pakistan, and others
India has been one of the least happy countries in the world in recent years.
It was ranked 126 out of 137 countries surveyed, according to the 2023 edition of the World Happiness Report released yesterday (March 20). It was placed worse than neighbors like Nepal, China, Bangladesh, Pakistan, and others. The country is worse off than even war-hit Ukraine.
The annual report for the 2020-2022 time period uses life evaluations from the Gallup World Polls, which survey a representative sample of adults from every country, to arrive at its conclusions.
A lack of social support and connections among citizens during the covid-19 pandemic has been identified as the key reason for Indians being so gloomy. The pandemic-induced lockdown left millions of Indians stuck in social isolation, leading up to stress and depression.
Experts said that a lack of social connections over long periods of time, along with severe unemployment, high inflation scenario and healthcare worries, took a toll on people’s mental health.
“While people in India were least likely to have had daily interactions with nearby friends or family, at 58%, they were among the most likely to say they had interacted with friends or family who live far away (42%),” the State of Social Connections study by Gallup, Meta, and academic advisers in 2022 stated. Moreover, there was no notable relationship between households and social support in India.
About 55% of Indian women said they “never” interacted with people from work or school in the past seven days, compared to 33% of men. Even social media platforms were of little help to Indians.
https://www.wsj.com/articles/why-chinese-apps-are-the-favorites-of-young-americans-a9a5064a?st=rdobpc1nq76mt9q via @WSJ
India has also used the moment (G20 summit) to finger-point at Europe, rather than condemn Russian aggression. Last year, India’s foreign minister, Subrahmanyam Jaishankar, said, “Europe has to grow out of the mindset that Europe’s problems are the world’s problems.”
Jaishankar’s critique of Eurocentrism has merit. It’s also shared by many in the Global South, who bristle as the West has committed well over $100 billion in aid to Ukraine, but falls short in addressing challenges like climate change, the debt crisis, and food insecurity that are hurting poorer countries. Many of these problems have been exacerbated by the Russia-Ukraine war.
India has rightly put these issues on the G20 agenda this year. But it’s actually doing little more than paying lip service to them. The G20 finance ministers’ meeting last month concludedwithout any tangible commitments to debt-distressed countries like Sri Lanka.
In reality, India is using the G20 presidency and other global platforms to engage in sanctimonious posturing to gain space for the naked pursuit of its self-interest. It’s also leveraging them to project Prime Minister Narendra Modi’s image as a Hindu strongman at home.
India is no ally of the West or the Global South. It is a selective partner only out for itself. It seeks a multipolar world order in which the power of the West is diminished. Paradoxically, the U.S. and its allies are aiding India in reducing their global influence.
Policy elites in Washington and other Western capitals must come to terms with this reality. Naively, they see India’s rise as a world power as an indisputable good in countering China, so much that they ask for little in return. They give India the benefit of the doubt, even when it so brazenly pursues its interest at odds with their own.
If the behavior of India isn’t telling enough, its words are loud and clear. Jaishankar — India’s chief grand strategist — writes in his 2020 book that India should focus on “advancing national interests by identifying and exploiting opportunities created by global contradictions.” A top advisor to Modi, Jaishankar promotes a commitment-free foreign policy, arguing that India should leverage “competition to extract as much gains from as many ties as possible.” In other words, India is playing all sides against one another.
To its detriment, the West gives India easy wins without asking it to make real sacrifices or protect human rights. Its indulgence of India’s grandstanding and flaccid responses to taunting by Jaishankar and others also furthers Modi’s domestic Hindu nationalist agenda.
It allows Modi to not only project India as a “vishwa guru” or “world teacher,” but also furthers his own image as a mighty Hindu who is humbling the West and can act with impunity. Indeed, as civic and religious freedoms erode in India, Western governments balk at condemnation let alone punitive action.
The domestic symbolism of India’s global theatrics is lost on Western leaders. This is partly because the U.S. and other Western countries have failed to develop the institutional knowledge of the Hindutva (Hindu nationalist) ideology, lexicon, and networks. By contrast, there’s tremendous work on the Chinese Communist Party.
Case in point, when Australian Foreign Minister Penny Wong cited India as a “civilizational power” this month, she inadvertently endorsed the BJP’s idea of a Hindu civilization or a “Hindu Rashtra,” in which Muslims are debased and erased.
Sadly, Western officials allow themselves to imagine a world in which the Hindutva ideology does not exist. They continue to proclaim that they are bound with India by “shared values,” as German Chancellor Olaf Scholz did last month, ignoring India’s very blatant authoritarian, majoritarian turn.
There is much to worry about when it comes to India’s future course. But the West is simply choosing to look away.
In the last six years, China has lent $185 billion in emergency loans to developing nations. That’s more than the IMF.
Multipolar world where poor countries are not the mercy of one system. 👋🏻👇🏽
Also an important fact is that the majority of the loans are happening in Yuan
“Lender of last resort” — Bloomberg
Is China finally living up to its responsibility as the world’s second-largest economy? Or is it setting up a rival system of global governance as the relationship between Beijing and Washington gets sourer by the day?
Those are the questions raised – once again, the cognoscenti might say – by a new paper that lays out the growing role of China as a lender of last resort to countries in economic peril, of which there is now a growing list.
Among the findings of a new paper that my colleague Tom Hancock and I report on here:
From 2000-21, the People’s Bank of China and state-owned banks sent $240 billion to governments in the developing world in what amounted to emergency loans.
The bulk of that came in 2016-21, when 22 countries got some $185 billion, according to what the researchers were able to document.
That total surpassed the $144 billion that IMF data shows its members having drawn from the Washington-based lender during that time.
The research — by Sebastian Horn of the World Bank, Brad Parks of the William & Mary AidData project, former World Bank chief economist Carmen Reinhart and Christoph Trebesch of Germany’s Kiel Institute for the World Economy — is part of a growing body of work looking at Chinese lending.
See new Tweets
China is the world’s #1 manufacturer of cars and the #2 exporter of cars.
And China’s #1 customer is… Putin! I mean, Russia.
The U.S. and its non-sovereign puppet continent known as Europe must understand that the world has become more self-sufficient and resilient.
The “Ameripeans” cannot sanction or bomb other countries into submission anymore.
China closes gap with Japan after 2022 car exports surpass Germany with 54.4 per cent surge to 3.11 million vehicles | South China Morning Post
China has surpassed Germany to become the world’s second-largest car exporter after mainland exports jumped 54.4 per cent year on year to 3.11 million vehicles in 2022, according to the China Association of Automobile Manufacturers (CAAM).The nation is also closing in on Japan’s export volume, and is likely to clinch the title of the world’s top car exporter in the coming few years, analysts said.According to MarkLines, an auto industry data provider, Japanese carmakers shipped 3.2 million vehicles abroad in the first 11 months of 2022, almost unchanged from a year earlier.In 2021, Japan exported 3.82 million cars, and it is expected to post a year-on-year decline once its full-year results are tallied.
Germany exported 2.61 million cars last year, up 10 per cent from 2021, according to the German Association of the Automotive Industry (VDA).“The strong growth momentum in China’s car exports has helped the nation to earn a reputation as a powerful carmaker, as its passenger and commercial vehicles are well received by people outside the mainland,” said Cao Hua, a partner at private-equity firm Unity Asset Management. “China’s electric cars have won considerable market share in some developing nations and will eventually propel the country into the top position of the world’s major auto exporters.”
Exports accounted for 11.5 per cent of mainland China’s total 2022 production of passenger cars and commercial vehicles, which rose 3.4 per cent year on year to 27 million, according to the CAAM.
China’s car market, the world’s largest since 2009, has long been dominated by foreign brands such as Volkswagen, General Motors, BMW and Mercedes-Benz.However, the country’s indigenous brands, such as BYD and Geely, are accelerating a global push, supported by a robust automotive supply chain.Electric vehicles (EVs) have become a significant factor in China’s buoyant car exports, with EV shipments surging 120 per cent year on year to 679,000 in 2022, the CAAM data showed.
Citic Securities forecast in a research report last month that China’s car export volume could hit 5.5 million units in 2030, of which 2.5 million cars would be electric.UBS analyst Paul Gong said that Chinese EV builders have been racing ahead of their Japanese and South Korean rivals to tap Southeast Asian markets and also have plans to set up production bases and promote their vehicles there.“It is not just the beginning of the Chinese carmakers’ global push,” said Gong. “They are already the established market leaders in some Southeast Asian countries.”
BYD, backed by Warren Buffett’s Berkshire Hathaway, dethroned Tesla as the world’s largest EV maker in the second quarter of 2022.In mid-October, the company launched its first passenger vehicle in India, the Atto 3 electric sport utility vehicle, to spur overseas sales. It is now selling its cars in multiple overseas markets including Norway, Singapore and Brazil.BYD is also considering building a battery plant in the United States but does not currently plan to sell its electric cars there, according to a Bloomberg news report.
In conversations with young Indian women, I hear again and again about the barriers they face that their brothers don’t. It’s difficult for single women to rent apartments, it’s considered inappropriate for them to be out in the evening, and they are subjected to a blizzard of sexual harassment, which persists because of a culture of impunity.
Yet I wonder if that, too, isn’t changing. India has more strong, independent women than ever, and they are forcing change.
As for the I.T. sector, it’s dazzling and in some respects ahead of the United States. Here in India, digital data on mobile phones is extremely cheap, and you can buy a mango from a street vendor with your phone. Digital transactions are everywhere, and people easily keep digital records securely on their phones.
Nandan Nilekani, a pioneer in information services, says that India’s digital public infrastructure enables a technology-led growth model, and there are indeed signs of a boom in entrepreneurial activity in the tech sector: India had 452 start-ups in 2016 and 84,000 last year.
But it is export-led manufacturing that traditionally has provided the path for economic breakout in Asia because it can employ an enormous number of people. In India, manufacturing’s share of the economy has stagnated, and international executives share horror stories about red tape and the difficulty of doing business.
“The point of manufacturing is really job creation,” noted Alyssa Ayres, an India specialist at George Washington University, and that isn’t happening much. “People are worried about why the needle isn’t moving.”
India has had false dawns before. For a while in the 2000s, it was enjoying economic growth rates of roughly 8 percent per year, and it seemed that it might become the next Asian tiger economy. In 2010, The Economist published a cover story, “How India’s Growth Will Outpace China’s.”
Today India has a new chance to lure manufacturers. China has an aging population, its brand is tarnished by repression, and global companies are eager to find new manufacturing bases. India has English speakers, a familiar legal system, low-cost workers and first-rate engineers emerging from the Indian Institutes of Technology.
Arvind Subramanian, a former economic adviser to the government of India who is now at Brown University, is skeptical that India will change its policies enough to seize the opportunity presented by China’s difficulties. But he thinks Apple’s efforts to manufacture iPhones in India offer a ray of hope by encouraging other companies to follow.
“The entry of Apple is significant — that is the space to watch,” he said. “If Apple thinks India can be a competitive place from which to export to the world, there could be demonstration effects.”
If India can boost education, free its women to join the labor force and attract the companies that are desperate to find new bases for manufacturing, it can surprise us again.
If it can do that, it will recover its historical role as an economic powerhouse, and the past few centuries of poverty will be forgotten — a blink of the eye in the context of India’s ancient civilization. It would again be normal to think of India as a great power and one of the pillars of the global economy, and that would change the world.
No silver bullet that will fix weak job creation, a small, uncompetitive #manufacturing sector & gov’t schemes fattening corporate profits
by Ashoka Mody
Indian elites are giddy about their country’s economic prospects, and that optimism is mirrored abroad. The International Monetary Fund forecasts that India’s GDP will increase by 6.1 per cent this year and 6.8 per cent next year, making it one of the world’s fastest-growing economies.
Other international commentators have offered even more effusive forecasts, declaring the arrival of an Indian decade or even an Indian century.
In fact, India is barrelling down a perilous path. All the cheerleading is based on a disingenuous numbers game. More so than other economies, India’s yo-yoed in the three calendar years from 2020 to 2022, falling sharply twice with the emergence of Covid-19 and then bouncing back to pre-pandemic levels. Its annualised growth rate over these three years was 3.5 per cent, about the same as in the year preceding the pandemic.
Forecasts of higher future growth rates are extrapolating from the latest pandemic rebound. Yet, even with pandemic-related constraints largely in the past, the economy slowed in the second half of 2022, and that weakness has persisted this year. Describing India as a booming economy is wishful thinking clothed in bad economics.
Worse, the hype is masking a problem that has grown in the 75 years since independence: anaemic job creation. In the next decade, India will need hundreds of millions more jobs to employ those who are of working age and seeking work. This challenge is virtually insurmountable considering that the economy failed to add any net new jobs in the past decade, when 7 million to 9 million new jobseekers entered the market each year.
This demographic pressure often boils over, fuelling protests and episodic violence. In 2019, 12.5 million people applied for 35,000 job openings in the Indian railways – one job for every 357 applicants. In January 2022, railway authorities announced they were not ready to make the job offers. The applicants went on a rampage, burning train cars and vandalising railway stations.
With urban jobs scarce, tens of millions of workers returned during the pandemic to eking out meagre livelihoods in agriculture, and many have remained there. India’s already-distressed agriculture sector now employs 45 per cent of the country’s workforce.
Farming families suffer from stubbornly high underemployment, with many members sharing limited work on plots rendered steadily smaller through generational subdivision. The epidemic of farmer suicides persists. To those anxiously seeking support from rural employment-guarantee programmes, the government unconscionably delays wage payments, triggering protests.
For far too many Indians, the economy is broken. The problem lies in the country’s small and uncompetitive manufacturing sector.
by Ashoka Mody
Since the liberalising reforms of the mid-1980s, the manufacturing sector’s share of GDP has fallen slightly to about 14 per cent, compared to 27 per cent in China and 25 per cent in Vietnam. India commands less than a 2 per cent global share of manufactured exports, and as its economy slowed in the second half of 2022, the manufacturing sector contracted further.
Yet it is through exports of labour-intensive manufactured products that Taiwan, South Korea, China and now Vietnam came to employ vast numbers of their people. India, with its 1.4 billion people, exports about the same value of manufactured goods as Vietnam does with 100 million people.
Those who believe that India stands at the cusp of greatness usually focus on two recent developments. First, Apple contractors have made initial investments to assemble high-end iPhones in India, leading to speculation that a broader move away from China by manufacturers will benefit India despite the country’s considerable quality-control and logistical problems.
while such an outcome is possible, academic analysis and media reports are discouraging. Economist Gordon H. Hanson says Chinese manufacturers will move labour-intensive manufacturing from the country’s expensive coastal hubs to its less-developed interior, where production costs are lower.
Moreover, investors moving out of China have gone mainly to Vietnam and other countries in Southeast Asia, which like China are members of the Regional Comprehensive Economic Partnership. India has eschewed membership in this trade bloc because its manufacturers fear they will be unable to compete once other member states gain easier access to the Indian market.
As for US producers pulling away from China, most are “near-shoring” their operations to Mexico and Central America. Altogether, while some investment from this churn could flow to India, the fact remains that inward foreign investment fell year on year in 2022.
The second source of hope is the Indian government’s Production-Linked Incentive Schemes, which were introduced in early 2021 to offer financial rewards for production and jobs in sectors deemed to be of strategic value. Unfortunately, as former Reserve Bank of India governor Raghuram G. Rajan and his co-authors warn, these schemes are likely to end up merely fattening corporate profits like previous sops to manufacturers.
India’s run with start-up unicorns is also fading. The sector’s recent boomrelied on cheap funding and a surge of online purchases by a small number of customers during the pandemic. But most start-ups have dim prospects for achieving profitability in the foreseeable future. Purchases by the small customer base have slowed and funds are drying up.
Looking past the illusion created by India’s rebound from the pandemic, the country’s economic prognosis appears bleak. Rather than indulge in wishful thinking and gimmicky industrial incentives, policymakers should aim to power economic development through investments in human capital and by bringing more women into the workforce.
India’s broken state has repeatedly avoided confronting long-term challenges and now, instead of overcoming fundamental development deficits, officials are seeking silver bullets. Stoking hype about an imminent Indian century will merely perpetuate the deficits, helping neither India nor the rest of the world.
Ashoka Mody, visiting professor of international economic policy at Princeton University, is the author of India is Broken: A People Betrayed, Independence to Today. Copyright: Project Syndicate
India, with a 13% weighting in the emerging-markets index, has also been a drag, with its stocks in the index down more than 8% from the end of 2022.
Prospects for medium- to long-term growth on the back of an expanding population had helped make India a popular investment alternative to China, lifting the benchmark Sensex index to a record high in December. But concerns are growing over deceleration in the short term.
"India's economy would be considered to be in a recession by developed-economy standards," said Toru Nishihama at the Dai-ichi Life Research Institute. Though the economy grew 4.4% on the year in real terms in the fourth quarter of 2022, seasonally adjusted GDP shrank on an annualized basis for a second straight quarter.
High inflation has forced the Reserve Bank of India to hike interest rates even at the risk of chilling the economy. While the International Monetary Fund expects India's economy to grow 6.1% for the year starting in April, private-sector forecasts are more pessimistic, with HSBC expecting a slowdown to 5.5%.
More broadly, fears that tightening credit conditions amid the recent banking turmoil could bring on a global downturn are putting downward pressure on shares, especially in resource exporters like Brazil and the United Arab Emirates. The Refinitiv/CoreCommodity CRB index, a broad measure of international commodity price trends, sank to its lowest in more than a year in mid-March.
Market watchers had harbored high hopes for emerging economies this year.
Morgan Stanley said in November that emerging-market stocks would emerge from their longest-ever bear run this year, with the MSCI index up 12% compared with a 1% fall for the S&P 500. It anticipated that slowing inflation and a rebound from the impact of the strong dollar last year would spur Asian countries in particular to lead a global economic recovery.
Emerging-market equity funds saw net inflows of $37.2 billion between early December, when capital began moving back in that direction, and late March. But the pace has slowed sharply, from $29.4 billion in the first two months to $7.8 billion since February. The week of March 10, which brought the collapse of Silicon Valley Bank, saw a net outflow of $65.94 million.
Despite this, a Bank of America survey of institutional investors this month found that nearly 40% were overweight emerging-market stocks, making it the second-most-popular trade behind cash. U.S. stocks, by contrast, were the top target for underweighting.
India's per capita consumption of food was at $314 in 2020 compared to $884 for China, while that of clothing stood at $53.9 versus $212.9 for China, data from CLSA showed. Per capita spending on health related items in India was $56.8 in 2020 and $389.3 for China, the data showed.
"A pattern will continue to repeat for years in India: industry after industry emerging from a long period of under-penetration" and moving up the per capita consumption scale, said Vikas Pershad, portfolio manager for Asian equities at M&G Investments.
"The range of industries will span healthcare delivery (hospitals) to cars and two-wheelers to housing finance companies and cement."
As the incomes and wealth of Indians rise, their aspirational needs will see demand ramp up for packaged food and beverages, branded goods, travel, preventive healthcare, and personal care, said ICICI Prudential's Khandelwal and the fund's chief investment officer S Naren.
FOREIGN INVESTORS JUMP IN
With private consumption accounting for 60% of India's $3.5 trillion GDP, foreign portfolio investors have been quick to latch on.
They pumped in a net $2.7 billion in four key consumption sectors - automobiles, consumer durables, consumer services and FMCG, in the first 11 months of the financial year 2022-23 (April-March), according to data from India's National Securities Depository Ltd.
In contrast, the broader Indian equity markets saw an outflow of $5.9 billion.
To be sure, it has not been all smooth sailing for investors as they chased India's consumption boom. Shares of the new-age technology companies have tumbled since their listings, and while they now trade at more reasonable valuations, they are still pricey compared to the industry median.
And most traditional consumer-focused companies also trade at valuations above the benchmark index.
Indian equities remain quite expensive both on a historical and relative basis, compared to China, for instance, said David Chao, global market strategist at Invesco Asia Pacific, who sees "outsized" growth in segments like quick service restaurants and consumer durables.
But investors have to look beyond that, he said. "To be an investor and make money in India, you have to take a longer time horizon."
IT services still accounted for 45% of India's total services exports in April-December.
Professional and management consulting grew the fastest - at a 29% compounded annual growth rate over the last three years, as per estimates by economists at HSBC Securities and Capital Markets.
The recent growth in services exports has been largely powered by global capability centres, which have started to offer global clients a range of high-end and critical solutions such as accounting and legal support.
This, together with a drop in merchandise trade deficit, resulted in the current account deficit shrinking more than expected to $18.2 billion, or 2.2% of GDP.
A surge in India's services exports, which hit a record high in the October-December quarter, is expected to shield the economy from external risks as a slowing global economy will likely weigh on the country's merchandise exports.
Service exports are no longer being driven by IT services alone but also by more lucrative offerings such as consulting and research and development, analysts and economists told Reuters.
India's services exports rose 24.5% on year in October-December 2022, hitting a record $83.4 billion during the quarter, data released by the Reserve Bank of India (RBI) on Friday showed.
The services surplus, which deducts any imports in the category, also rose 39.21% to a record $38.7 billion.
This, together with a drop in merchandise trade deficit, resulted in the current account deficit shrinking more than expected to $18.2 billion, or 2.2% of GDP.
"We expect services exports to grow to over $375 billion by March 2024, as compared to $320-350 billion for the year ending March 2023," said Sunil Talati, chairman of the Services Export Promotion Council.
Services exports will likely surpass goods exports by March 2025, he said.
October-December merchandise exports stood at $105.6 billion, according to latest RBI data.
As a result, such exports will hold up better compared to goods exports in the face of a weakening global economy, analysts said.
Over the last two to three years, there has been a rapid growth in global capability centres, said Sangeeta Gupta, chief strategy officer at software industry lobby group Nasscom.
Nasscom estimates that India is home to over 45% of such global capability centres in the world.
According to Pranjul Bhandari, chief India economist at HSBC Securities and Capital Markets, such centres started off providing support functions, but they have now moved up the ladder to tech enablement, business operations, capability development, and even R&D and business development.
While U.S. companies were the first movers in India, a lot of companies from Europe, Australia and Asia are also exploring stepping up their operations, Nasscom's Gupta said.
An acceleration in digitalisation after the Covid crisis and a lack of adequate tech talent in some of these countries are key factors, she added.
Sectors such as tourism, education, financial services and health also contributed to India's higher service exports.
Modi has counted on sympathetic journalists and financial speculators in the West to cast a seductive veil over his version of political economy, environmental activism and history. ‘I’d bet on Modi to transform India, all of it, including the newly integrated Kashmir region,’ Roger Cohen of the New York Times wrote in 2019 after Modi annulled the special constitutional status of India’s only Muslim-majority state and imposed a months-long curfew. The CEO of McKinsey recently said that we may be living in ‘India’s century’. Praising Modi for ‘implementing policies that have modernised India and supported its growth’, the economist and investor Nouriel Roubini described the country as a ‘vibrant democracy’. But it is becoming harder to evade the bleak reality that, despoiled by a venal, inept and tyrannical regime, ‘India is broken’ – the title of a disturbing new book by the economic historian Ashoka Mody.
The number of Indians who sleep hungry rose from 190 million in 2018 to 350 million in 2022, and malnutrition and malnourishment killed nearly two-thirds of the children who died under the age of five last year. At the same time, Modi’s cronies have flourished. The Economist estimates that the share of billionaire wealth in India derived from cronyism has risen from 29 per cent to 43 per cent in six years. According to a recent Oxfam report, India’s richest 1 per cent owned more than 40.5 per cent of its total wealth in 2021 – a statistic that the notorious oligarchies of Russia and Latin America never came close to matching. The new Indian plutocracy owes its swift ascent to Modi, and he has audaciously clarified the quid pro quo. Under the ‘electoral bond’ scheme he introduced in 2017, any business or special interest group can give unlimited sums of money to his party while keeping the transaction hidden from public scrutiny.
Modi also ensures his hegemony by forging a public sphere in which sycophancy is rewarded and dissent harshly punished. Adani last year took over NDTV, a television news channel that had displayed a rare immunity to hate speech, fake news and conspiracy theories. Human Rights Watch has detailed a broad onslaught on democratic rights: ‘the Hindu nationalist Bharatiya Janata Party (BJP)-led government used abusive and discriminatory policies to repress Muslims and other minorities’ and ‘arrested activists, journalists and other critics of the government on politically motivated criminal charges, including of terrorism’. Last month, as the BJP’s official spokesperson denounced the BBC as ‘the most corrupt organisation in the world’, tax officials launched a sixty-hour raid on the broadcaster’s Indian offices in apparent retaliation for a two-part documentary on Modi’s role in anti-Muslim violence.
Also last month, the opposition leader Rahul Gandhi was expelled from parliament to put a stop to his persistent questions about Modi’s relationship with Adani. Such actions are at last provoking closer international scrutiny of what Modi calls the ‘mother of democracy’, though they haven’t come as a shock to those who have long known about Modi’s lifelong allegiance to Rashtriya Swayamsevak Sangh, an organisation that was explicitly inspired by European fascist movements and culpable in the assassination of Mohandas Gandhi in 1948.
By Kunal Purohit
A study by the Indian Institute of Foreign Trade (IIFT), a state-backed university in New Delhi, found that Chinese imports were boosting India’s manufacturing and its exports in key sectors, including inorganic chemicals, pharmaceuticals, iron and steel.
It also found that rising imports in all the selected industries, except iron and steel, had led to a corresponding rise in output in those industries.
It also found that rising imports in all the selected industries, except iron and steel, had led to a corresponding rise in output in those industries.
From sectors where Chinese goods were the cheapest choice to industries where they were the sole option, the paper highlighted the crucial role of such imports and recommended a re-evaluation of Prime Minister Narendra Modi’s campaign to make India self-reliant.
“The current policy thrust on ‘self-reliance’, or atmanirbhar bharat, will not be effective unless the domestic manufacturing is propelled to high-technology products. Then rising imports will not be a concern as they lead to an increase in exports,” stated the paper by IIFT Professor Sunitha Raju.
It recommended the Indian government lower trade barriers and encourage imports to strengthen the country’s domestic manufacturing capabilities. Such an approach, the paper argued, would boost manufacturing growth and create greater employment opportunities.
India’s Commerce Ministry declined to comment on the issue when contacted by This Week in Asia.
Since 2020, when clashes between Indian and Chinese soldiers led to a stand-off at numerous points along their border, Delhi has been attempting to decouple India’s economy from China’s.
It has placed restrictions on Chinese investments in India, blocked Chinese firms in sensitive sectors such as power and railways, and banned hundreds of mobile apps originating from China, including the popular TikTok.
Despite these efforts, trade between the two countries has skyrocketed. In 2022, bilateral trade reached a record US$135.98 billion, according to Chinese customs data.
To Delhi’s dismay, Indian imports of Chinese goods accounted for more than US$100 billion of total trade. The Modi government in January summoned 18 top ministries to discuss ideas to cut down imports from China.
IIFT’s latest research might lead to second thoughts in Delhi about cutting Chinese imports. The paper found such imports not only provided crucial raw materials but also bolstered productivity in other industries. “All this also leads to an increased manufacturing output,” Raju said.
The study found that of the 32 product subcategories imported from China, it was the cheapest supplier in nearly one-third of cases. For the remaining 70 per cent, there were cheaper alternatives available, and yet, the Chinese product was preferred.
“There is a misconception that Chinese imports are preferred only because they are cheaper,” said Raju, adding that the quality of goods provided by Chinese suppliers varied, depending on the price buyers were willing to pay. “We found many domestic buyers who said they preferred the quality of products from China to the products made elsewhere.”
Complicating the matter further is the fact that China was the sole supplier for 16 products, leaving domestic manufacturers with little choice.
On the ground, traders and experts agree.
But even as New Delhi takes unprecedented steps toward shoring up relations with the Washington, there appears to be little chance the traditionally non-aligned nation will establish any formal defense alliance with the U.S.
"In fact, we do refer to India and the USA as natural allies," former Indian ambassador to China Ashok Kantha told Newsweek, "but this is not in the sense of a military alliance."
Such an alliance would run contrary to more than 75 years of India's post-colonial history after winning its independence from the United Kingdom and suffering a violent partition with Pakistan, sparking the first of several wars over disputed territory with the neighboring Islamic Republic as well as one with China six decades ago. Even during some of the nation's most dire crises, however, India has opted to not choose sides among world powers.
"We had to suffer a period of colonial subjugation lasting two centuries, and then we emerged as one of the most populous countries in the world, which was also innovative in democracy, in multiculturalism and in an open society," Kantha said. "We came to the conclusion during the Cold War period that India cannot be a camp follower of either great power, at that time the USA and the Soviet Union, that we will work with both countries."
Today, this policy referred to by India as "strategic autonomy" continues amid growing frictions between the U.S. and China, even if New Delhi saw Washington as the better partner.
Swaran Singh, a visiting professor at the University of British Columbia with decades of experience lecturing at India's major diplomatic and military institutions, also argued that managing this relationship was essential for achieving the long-term objectives of both powers.
"De-escalation is the only way as both China and India cannot afford to derail their development trajectories and miss their imagined historic resurgence to the center stage of world affairs," Singh told Newsweek. "But as two rapidly growing economies and peer civilizational states reclaiming their place under the sun, their competition remains inevitable."
Still, China's growing clout in the economic, military and diplomatic spheres have presented both risk and opportunity for New Delhi.
"While China has demonstrated an unprecedented economic growth that undergirds its political influence and military modernization, China's rise has made India the preferred partner for status quo powers in the U.S.-led liberal world order," Singh said. "This has opened doors for technology transfers and defense cooperation for India, making India the only neighbor that has showcased capacity to stand up to China."
India has also doubled down on its participation in another multilateral group, the Quadrilateral Security Dialogue, commonly known as the Quad, alongside the U.S., Australia and Japan. The quartet has intensified cooperation among members and it is regularly accused by China of representing an attempt to form a bloc built on containing the People's Republic.
"The power gap between India and China, is certainly a major factor driving the current convergence of U.S.-India ties," Joshi said. "But India's positions are mainly driven by its size and interests. It perceives a significant security threat from Pakistan, whereas the U.S. has been at various times a major military ally of Pakistan. And where it sees Iran as a relatively benign actor in the Persian Gulf and a friend, the U.S. has seen Tehran as a hostile player."
"This rules out the possibility of a formal military alliance with the U.S.," Joshi said, "something that would require a much closer identity of views."
(Indian) Exports to China dipped by about 28 per cent to USD 15.32 billion in 2022-23, while imports rose by 4.16 per cent to USD 98.51 billion in the last fiscal. Trade gap widened to USD 83.2 billion in the last fiscal as against USD 72.91 billion in 2021-22.
The US has emerged as India's biggest trading partner in 2022-23 on account of increasing economic ties between the two countries.
According to the provisional data of the commerce ministry, the bilateral trade between India and the US has increased by 7.65 per cent to USD 128.55 in 2022-23 as against USD 119.5 billion in 2021-22. It was USD 80.51 billion in 2020-21.
Exports to the US rose by 2.81 per cent to USD 78.31 billion in 2022-23 as against USD 76.18 billion in 2021-22, while imports grew by about 16 per cent to USD 50.24 billion, the data showed.
On the other hand, during 2022-23, India's two-way commerce with China declined by about 1.5 per cent to USD 113.83 billion as against USD 115.42 billion in 2021-22.
Exports to China dipped by about 28 per cent to USD 15.32 billion in 2022-23, while imports rose by 4.16 per cent to USD 98.51 billion in the last fiscal. Trade gap widened to USD 83.2 billion in the last fiscal as against USD 72.91 billion in 2021-22.
Experts believe that the trend of increasing bilateral trade with the US will continue in the coming years also as New Delhi and Washington are engaged in further strengthening the economic ties.
Federation of Indian Export Organisations (FIEO) President A Sakthivel said that increasing exports of goods such as pharmaceutical, engineering and gems and jewellery is helping India to push its shipments to America.
"The trend of increasing trade with the US will continue in the coming months also," he said.
FIEO Vice President Khalid Khan said India is emerging as a trusted trading partner and global firms are reducing their dependence only on China for their supplies and are diversifying business into other countries like India.
"The bilateral trade between India and the US will continue to grow as our exporters are getting good orders from that country," Khan said.
Rakesh Mohan Joshi, Director of the Indian Institute of Plantation Management (IIPM), Bangalore, too said that India provides huge trade opportunities for the US as India is the world's third largest consumer market and the fastest growing market economy.
"Major export items from India to the US include petroleum, polished diamonds, pharmaceutical products, jewellery, light oils and petroleum, frozen shrimp, made ups etc. whereas major imports from the US include petroleum, rough diamonds, liquified natural gas, gold, coal, waste and scrap, almonds etc," Joshi said.
America is one of the few countries with which India has a trade surplus. In 2022-23, India had a trade surplus of USD 28 billion with the US.
The data showed that China was India's top trading partner since 2013-14 till 2017-18 and also in 2020-21. Before China, the UAE was the country's largest trading partner.
In 2022-23, the UAE with USD 76.16 billion, was the third largest trading partner of India. It was followed by Saudi Arabia (USD 52.72 billion), and Singapore (USD 35.55 billion).
CHINA will be the top contributor to global growth over the next five years, with its share set to be double that of the US, according to the International Monetary Fund.
The nation’s slice of global gross domestic product expansion is expected to represent 22.6 per cent of total world growth through 2028, according to Bloomberg calculations using data the fund released in its World Economic Outlook released last week. India follows at 12.9 per cent, while the US will contribute 11.3 per cent.
The emergency lender sees the world economy expanding about 3 per cent over the next half decade as higher interest rates bite. The outlook over the next five years is the weakest in more than three decades, with the fund urging nations to avoid economic fragmentation caused by geopolitical tension and take steps to bolster productivity.
In total, 75 per cent of global growth is expected to be concentrated in 20 countries and over half in the top four: China, India, the US and Indonesia. While Group of Seven countries will comprise a smaller share, Germany, Japan, the United Kingdom and France are seen among the top 10 contributors.
Brazil, Russia, India and China – known by the acronym BRIC coined by Jim O’Neill, a former Goldman Sachs Group chief economist – are expected to add almost 40 per cent of the world’s growth through 2028.
The four nations established the BRIC forum in 2009 and the bloc became Brics a year later when South Africa – by far the smallest economy in the grouping – was admitted, a move O’Neill disagreed with.
Business is booming in India’s $117 billion education industry and new colleges are popping up at breakneck speed. Yet thousands of young Indians are finding themselves graduating with limited or no skills, undercutting the economy at a pivotal moment of growth.
Desperate to get ahead, some of these young people are paying for two or three degrees in the hopes of finally landing a job. They are drawn to colleges popping up inside small apartment buildings or inside shops in marketplaces. Highways are lined with billboards for institutions promising job placements.
Around the world, students are increasingly considering the return on degree versus cost. Higher education has often sparked controversy globally, including in the US, where for-profit institutions have faced government scrutiny. Yet the complexities of education in India are clearly visible.
It has the world’s largest population by some estimates, and the government regularly highlights the benefits of having more young people than any other country. According to a study by talent assessment firm Wheebox, half of all graduates in India are unemployed in the future due to problems in the education system.
Many businesses say they have difficulty recruiting because of the mixed quality of education. This has kept unemployment at a high level of over 7%, even though India is the fastest growing major economy in the world. Education is also becoming a big issue for Prime Minister Narendra Modi as he tries to attract foreign manufacturers and investors from China. Modi vowed to create lakhs of jobs in his campaign speeches, and the issue is likely to be hotly debated in the 2024 national elections.
“We face a challenge in hiring as the specific skill sets required by the industry are not readily available in the market,” said Yashwinder Patial, Director, Human Resources, MG Motor India.
The complications of the country’s education boom are visible in cities like Bhopal, a metropolis of about 2.6 million in central India. Huge hoardings of private colleges are ubiquitous, promising degrees and jobs to young people. One such advertisement said, “Regular classes and better placements: We need to say more.”
It is difficult to resist such promises for millions of young men and women dreaming of a better life in India’s dismal job scenario. Higher degrees, once accessible only to the wealthy, hold a special hold for young people from middle- and low-income families in India. Students interviewed by Bloomberg cited a variety of reasons for investing in more education, ranging from attempting to boost their social status to improving their marriage prospects to applying for government jobs, for which applicants are required to pay. Degree certificate is required.
Twenty-five-year-old Tanmay Mandal, a Bhopal resident, paid $4,000 for a bachelor’s degree in civil engineering. He was convinced that a degree was a path to a good job and a better lifestyle. He was not bothered by the high fees for his family, whose monthly income is only $420. Despite the cost, Mandal says he learned almost nothing about construction from teachers who appeared to have insufficient training themselves. He could not answer technical questions in job interview and is unemployed for the last three years.
Mandal said, ‘I wish I had studied in a better college.’ “Many of my friends are also sitting idle without jobs,” Mandal said. He still hasn’t given up. Even though he did not find his final degree useful, he wants to avoid the stigma of being unemployed and sitting idle. So, he has signed up for a master’s degree in another private institution as he believes that more degrees can at least raise his social status.
There is a bustling market place in the heart of Bhopal with training institutes for civil services, engineering and management. The students said that they had enrolled for these courses to upgrade their skills and boost their career opportunities after regular degree, as they did not get jobs of their choice.
A Bhopal educational institution in particular hit the headlines in recent years because it was involved in a case that went all the way to the Supreme Court of India. In 2019, the Supreme Court barred the Bhopal-based RKDF Medical College Hospital and Research Center from admitting new students for two years for allegedly using fake patients to meet the requirements of the medical college. The college initially argued in court that the patients were genuine, but later apologized after an investigative panel found that the alleged patients were not in fact sick.
“We have noticed a disturbing trend of some medical colleges in projecting bogus faculty and patients to obtain permission for admission of students,” the court said in its judgement. The medical college did not respond to a request for comment.
The Medical School is part of the RKDF Group, a well-known name in Central India with a wide network of colleges in fields ranging from Engineering to Medicine and Management. The group faced another controversy last year. In May last year, police in the southern city of Hyderabad arrested the vice-chancellor of the RKDF group’s Sarvepalli Radhakrishnan University as well as his predecessor for their alleged involvement in awarding fake degrees. Still, a flood of students could be seen in many RKDF institutes in Bhopal. One branch had posters of their “bright stars”—students who got jobs after graduation.
SRK University and RKDF University of RKDF Group did not respond to multiple requests for comment. On its website, the group says that it provides quality education by imparting teaching and practical skills while striving to provide robust infrastructure and facilities.
Elsewhere in Bhopal, another college was functioning in a small residential building. One of the students who studied there said that it was easy to secure admission and get a degree without attending classes.
India’s education industry is projected to reach $225 billion by 2025 from $117 billion in 2020, according to the India Brand Equity Foundation, a government trust. This is still very small compared to the US education industry, where spending is estimated to exceed $1 trillion. In India, public spending on education has remained stagnant at around 2.9% of GDP, well short of the 6% target set in the government’s new education policy.
The problems at the colleges have spread across the country, with a range of institutions in different states under official scrutiny. In some parts of India, students have gone on hunger strike to protest against the lack of teachers and facilities in their institutions. In January, charges were filed against the Himachal Pradesh-based Manav Bharti University and its promoters for allegedly selling fake degrees, according to a press release from the Enforcement Directorate. Manav Bharati University did not respond to a request for comment.
While institutes promote campus placements for students, many are not able to deliver on this promise. In 2017, an institute in the eastern state of Odisha offered fake job offers during campus placements, prompting students to protest.
Anil Swaroop, former secretary of school education, estimated in a 2018 article that of the 16,000 colleges offering bachelor’s qualifications for teachers, a sizeable number exist only in name.
Anil Swaroop, former secretary of school education, estimated in a 2018 article that of the 16,000 colleges offering bachelor’s qualifications for teachers, a sizeable number exist only in name.
“To call such so-called degrees useless would be an understatement,” said Anil Sadgopal, former dean of education at Delhi University and former member of the Central Advisory Board of Education that guides the federal government. “When lakhs of youth become unemployed every year, the whole society becomes unstable.”
All this is a challenge for big business. A study by HR firm SHL found that only 3.8% of engineers have the skills needed to be employed in software-related jobs in start-ups.
“The experience everyone has in the IT industry is that graduates need training,” said Mohandas Pai, former chief financial officer and board member of Infosys Ltd. and co-founder of private equity firm Aarin Capital. Pai, one of the Manipal Education and Medical Group companies, “trains a lot of people for banking. They are not job ready, they need to be trained.”
Even though companies are looking to recruit in areas such as electric vehicle manufacturing, artificial intelligence and human-machine interfaces, smaller Indian universities still teach older material such as the basics of the internal combustion engine, Patial said. “There’s a gap between what the industry is seeing and the curriculum they’ve gone through.”
India has regulatory bodies and professional councils to regulate its educational institutions. While the government has announced plans for a single agency to replace all existing regulators, it is still at the planning stage. The Education Department did not respond to a request for comment.
The Modi administration is also trying to address the shortcomings of the education sector in its new education policy of 2020, committed to improving the quality of its institutions. It has also started the process of allowing leading foreign universities to set up campuses in the country and award degrees.
Meanwhile, finding work remains a challenge for this generation. According to the World Bank, unemployment is a ticking time bomb as nearly a third of the country’s youth are not working, studying or undergoing training. Some are getting involved in crime and violence. Last year, angry youths facing bleak job prospects blocked rail traffic and highways, even setting some trains on fire.
Pankaj Tiwari, 28, says he paid Rs 100,000 for a master’s degree in digital communication because he wanted a job and a higher status in society. It was a huge outlay for his family, which has an annual income of Rs 400,000. Though his college had promised campus placements, no company turned up and he is still unemployed after four years.
“Had I gotten some training and skills in college, I might have been in a different situation. Now I feel like I wasted my time.’ “I have obtained certificates only on paper, but they are of no use.”
India ahead of China
India 1428 mn
China 1425 mn
World Bank Data :
China : $17.73 trillion
India : 3.18 trillion
China : 4.8%
(consumer prices) :
China : 1%
India : 5.1%
Think about it !
“The young people have a great potential to contribute to the economy,” said Poonam Muttreja, the executive director of the Population Foundation of India. “But for them to do that requires the country to make investments in not just education but health, nutrition and skilling for employability.”
There also need to be jobs. That’s a longstanding deficiency for a top-heavy and at times gridlocked economy that must somehow produce 90 million new jobs before 2030, outside agriculture, to keep employment rates steady. Even in the years immediately before the pandemic, India was falling far short of that pace.
In China, a shrinking and aging population will make it harder to sustain economic growth and achieve its geopolitical ambitions to surpass the United States. But in previous decades, when it was still growing, it found its way to transformative growth through export-driven manufacturing, like smaller East Asian countries did before it.
India has yet to be able to replicate that formula or to come up with one of its own that can achieve more than incremental gains.
The rate of development across the huge country remains widely unequal, with some Indian states akin to middle-income nations and others struggling to provide the basics. The distribution of resources is increasingly becoming a tense political issue, testing India’s federal system.
When Gayathri Rajmurali, a local politician from the southern state of Tamil Nadu, found herself in India’s north for the first time this year, the disparity shocked her. “The north, they are behind 10 to 15 years to our places,” she said, pointing to indicators like basic infrastructure and average income.
And then there is the combustible environment created by the Hindu-first nationalism of Prime Minister Narendra Modi’s ruling party, as his support base has sped up a century-old campaign to reshape India’s pluralist democratic tradition and relegate Muslims and other minorities to second-class citizenship. Demographic numbers are part of the political provocation game, with right-wing leaders often falsely portraying India’s Muslim population of 200 million as rising sharply in proportion to the Hindu population as they call on Hindu families to have more children.
Mr. Modi and his lieutenants say India is heading in only one direction: Up. They point to the undeniable gains in a country that has quadrupled the size of its economy within a generation.
The two nations share several historical parallels. The last time they traded places in population, in the 18th century or earlier, the Mughals ruled India and the Qing dynasty was expanding the borders of China; between them they were perhaps the richest empires that had ever existed. But as European powers went on to colonize most of the planet and then industrialized at home, the people of India and China became among the world’s poorest.
As recently as 1990, the two countries were still on essentially the same footing, with a roughly equal economic output per capita. Since then, China has shaken the world by creating more wealth than any other country in history. While India, too, has picked itself back up in the three decades since it liberalized its economy, it remains well behind in many of the most basic scales.
Today, China’s economy is roughly five times the size of India’s. The average citizen of China has an economic output of almost $13,000 a year, while the average Indian’s is less than $2,500. In human-development indicators, the contrast is even sharper, with infant mortality rates much higher in India, life expectancy lower and access to sanitation less prevalent.
The divergence, analysts say, comes down largely to China’s central consolidation of policy power, serious land reform, an earlier start in opening up its economy to market forces starting in the late 1970s, and its single-minded focus on export-led growth. China took the first-mover advantage and then compounded its dominance as it pursued its plans relentlessly.
India started opening its quasi-socialist economy nearly a decade later. Its approach remained piecemeal, constrained by tricky coalition politics and the competing interests of industrialists, unions, farmers and factions across its social spectrum.
“There is that element where China is a natural role model — not for its politics, but for the sheer efficiency,” said Jabin Jacob, a professor of international relations and governance studies at Shiv Nadar University near New Delhi.
Winner Takes it All: How Markets Favor the Few at the Expense of the Many
Markets tend to favor unequal distributions of market share and profits, with a few leaders emerging in any industry. Winner-take-all markets are hard to disrupt and suppress the entry of new players by locking in market share for leading players.
In almost any market, crowds of competitors fight for business within their niche. But over time, with few exceptions, a small number of companies come to dominate the industry.
These are the names we all know. The logos we see every day. The brands which shape the world with every decision they make. Even those which are not household names have a great influence on our lives. Operating behind the scenes, they quietly grow more powerful each year, often sowing the seeds of their own destruction in the process.
A winner-take-all market doesn’t mean there is only one company in the market. Rather, when we say a winner takes all, what we mean is that a single company receives the majority of available profits. A few others have at best a modest share. The rest fight over a miniscule remnant, and tend not to survive long.
In a winner-take-all market, the winners have tremendous power to dictate outcomes. Winner-take-all markets occur in many different areas. We can apply the concept to all situations which involve unequal distributions.
Muslims in Pakistan and Bangladesh are thriving when compared to Indian Muslims.
Indian Muslims are now worse off than Dalits and slipping further, according to Indian government's own data. They are being lynched daily on the streets by ruling BJP thugs with the active connivance of police. Their homes are being demolished by Hindu Nationalist governments.
In the Indian diaspora, there are very few Muslims. They are poorly educated. And so poor that they can't even afford to travel overseas.
In the Silicon Valley where I live, there are a very few Indian Muslims while there are tens of thousands of Pakistani Muslims here, even though the population of Indian Muslims is about the same as Pakistan's. It's the same story with doctors too.
The case related to the deaths of 11 Muslims who were killed after their homes in the city of Ahmedabad were set alight by Hindu mobs who rampaged through the streets during communal riots that took place in February 2002. According to an investigation into the attack afterwards, “there was no police help received by the Muslims and they were simply at the mercy of the miscreants”.
Thursday’s verdict by the special court dealt another blow for those still fighting for justice for the Gujarat riots. Over the past two decades, the state has been accused of protecting alleged Hindu perpetrators – including those who now hold some of the most powerful political offices in the country – as well as obstructing justice, intimidating Muslim victims and recently releasing some of the few who had been convicted of rape and violence against Muslims in the riots.
Shamshad Pathan, who represented the victims, said they would challenge the court’s decision in a higher court. “Justice has eluded the victims once again,” he said.
The Gujarat riots began after Muslims were suspected of setting alight a train carriage carrying Hindu pilgrims, sparking revenge attacks by Hindu groups in what became one of the worst outbreaks of religious bloodshed in India’s post-independence history. Officially about 1,000 people died in the violence, mostly Muslims, but civil society groups say the number was much higher.
India’s current prime minister, Narendra Modi, who leads the Hindu nationalist BJP government, was chief minister of Gujarat at the time and was accused of complicity in the bloodshed by allowing the Hindu groups to carry out the revenge attacks and encouraging police and authorities not to intervene to stop the violence. Modi denies any role and a supreme court panel found there was not enough evidence to prosecute him.
In this particular case, 86 Hindus were accused but 17 had died during the trial. Among those acquitted was Maya Kodnani, a former minister for Modi, who was a lawmaker at the time of the riots. She was also an accused in a case relating to the murder of 97 people during the riots and was convicted but later cleared by a higher court.
Those involved in rightwing Hindu vigilante groups Bajrang Dal and Vishwa Hindu Parishad, which both have close links to them BJP, were also among the accused cleared of charges. As the verdict was announced, cries of “Jai Sri Ram”, a Hindu religious greeting that has been increasingly co-opted and weaponised by Hindu nationalists as a battle cry, were shouted outside the court.
“We have been saying from the first day that they were framed,” said the defence lawyer Chetan Shah. “Some of the accused were not present at the scene on the day of the incident.”
The acquittal of the 69 comes after the Gujarat government, which is still ruled by the BJP, recently decided to give early release to 11 Hindu convicts who had been sentenced to life imprisonment for the gang-rape of a Muslim woman and the murder of members of her family, one of the few convictions successfully made in the Gujarat riots.
By India Today News Desk: A man relieving himself on the railway tracks in Alwar died after a cow, which came in the way of a Vande Bharat train, fell on him on Wednesday.
The incident occurred in the jurisdiction of Aravali Vihar police station in Alwar, Rajasthan. The deceased has been identified as Shivdayal Sharma -- a man who retired from the post of an electrician in the Indian Railways 23 years ago.
According to Shivdayal's relatives, a cow came in the way of a Vande Bharat train which left from Kali Mori gate around 8:30 am. The impact of the collision was such that a portion of the cow's body fell 30 metres away over Shivdayal, who was relieving himself on the tracks. Shivdayal died on the spot.
Shivdayal's body was sent for post-mortem to the district hospital on Wednesday morning. The semi-high speed Vande Bharat trains have had run-ins with cattle along many routes, the maximum number of them being reported from the Mumbai-Gujarat stretch.
Within days of its launch, the Mumbai-Gandhinagar Vande Bharat Superfast Express train suffered minor damage after colliding with cattle on October 6. The next day, the same train sustained a minor damage to its nose panel after it hit a cow near Anand station in Gujarat.
On October 8, the train had suffered a bearing defect in the traction motor of the C8 coach between the Dankaur and Wair stations. On October 29, the Mumbai-Gandhinagar Vande Bharat had a runover with a cattle near Atul in Gujarat's Valsad.
Union Railways Minister Ashwini Vaishnav said collision with cattle on the tracks is unavoidable and this has been kept in mind while designing the semi-high-speed Vande Bharat trains, which run at a speed of approximately 130-160 kmph.
Meanwhile, the Western Railways has decided to put metal fencing along the over 620km-long Mumbai-Ahmedabad trunk route to stop animals from straying onto the tracks and prevent accidents.
By Alex Travelli and Weiyi Cai
India is a country primed to work. More than two-thirds of all Indians are between the ages of 15 and 59. The country’s ratio of children and retirees to working-age adults is remarkably low.
But this opportunity comes with huge challenges. That “demographic dividend” could instead become something like a disaster. In some recent years, India has squeaked past China to claim the title of fastest-growing major economy. But it has never expanded fast enough to produce sufficient formal employment for everyone. The country needs about nine million new jobs every year just to keep pace; the annual shortfall helps relegate many to India’s old standby, agricultural work.
Most people in India lack the means to be “unemployed” – in the work force but without a job. Underemployment is the more discreet danger. Wages have been stagnant for eight years, according to an analysis by Jean Drèze, an economist at Delhi University. Economic growth without an equivalent increase in jobs makes India’s massively unequal society even more so, raising the potential for unrest.
India has one of the world’s lowest rates of formal employment for women: about one in five. China’s is almost double that rate, higher than the United States’ and the world average. An economy cannot meet its potential when it draws on the contributions of so few women.
Also worrisome, the rate has actually declined in India even as most of the country’s economic conditions have improved. The explanation favored by economists is that the jobs most women take are so poorly paid that as soon as a family can do without the extra income, wives stop working outside the home.
That does not mean women in India do not work hard. They are a visible presence in the 41 percent of society that is still in agriculture, and they carry nearly all of the household burdens. But so long as these women remain outside the formal work force, they cannot enter its most productive categories, in industry and services. Improved access to family planning, better education, efforts to change societal attitudes and measures to ensure women’s safety could help more women take on formal work.
India’s economic story, however it turns out, will not be a repetition of China’s. There are many ways in which India can rise, especially with industrial manufacturing no longer occupying the central role in the world economy that it once did.
Services now make up a huge and exciting part of the Indian economy, augmented by a low-cost digital infrastructure that India developed on its own. Other glimmers are also emerging: Chip makers are looking to India as a high-end substitute for China; online services are allowing millions of young Indians to work abroad without leaving home; and even life in India’s villages is becoming more urbanized by the year.
The only certainty about the new biggest country in the world is that it will be unlike any that came before it.
This week, the United Nations informed the world that India was now its most populous nation. According to the UN, there are now 1.428 billion people in India, as opposed to a mere 1.426 billion in China. When asked about this, China’s foreign ministry spokesperson sounded dismissive: “I want to tell you that population dividend does not depend on quantity but also quality.”
In 2020, however, pandemic-hit India postponed the census and claimed at first it would shift online — as was tried in the US, for example. Yet things have returned to normal, in India as elsewhere, and there’s no sign of preparations for a census, online or off.
India’s current government has a somewhat difficult relationship with data. Various surveys and calculations, from the national income accounts to household consumption patterns and jobs data, have been cancelled or reviewed over the past seven years.
This census was set to be even more politically explosive. In famously diverse India, the census provides the last word on the relative sizes of various groups. And those numbers don’t just determine their voting power in democratic India, but also the distribution of welfare and public services. Without an accurate census, Indian policymakers are fumbling in the dark.
Unfortunately, the demographic composition of Indians — what caste they were born into, where they live, and what religion they profess — is now exceptionally controversial.
Consider caste, for example. Not since 1931 has India determined the exact caste composition of its population. And yet our huge affirmative action system — with job and educational quotas earmarked for various caste groups — is based on that data. Any big shifts in the numbers would certainly impact caste-based political mobilization, and the government is unwilling to do the counting.
Then there’s religion. If minorities’ numbers have increased “too much,” there would be an outcry from the right-wing; if they haven’t, it becomes harder for politicians to tell Hindus that they are in demographic danger.
Even more potentially problematic are the numbers for language groups and state origins. India is a country of two halves: one with a rapidly growing population, and the other aging just as rapidly. By 2041, according to government estimates, the northern state of Bihar will have added 50 million people to its strength of 104 million in the 2011 Census. The southern state of Tamil Nadu, meanwhile, will have begun to shrink. Worse, the shrinking states are mostly ruled by strong regional parties, don’t speak the same language as the north, and are much richer.
New population numbers may mean that these states’ share of seats in the national parliament will decline, leaving them with little voice in New Delhi’s decisions. Inter-regional transfers in India, already high, will increase. One state finance minister has complained that sending local taxes north is “like throwing money down the well.”
Finally, there’s employment. India has no reliable data about how many jobs are being created for its hundreds of millions of young people. Two government surveys that estimated unemployment were shut down in 2017 and 2018. But the 2011 Census did tell us that 28% of households had somebody “seeking or available for work,” and that there were 47 million unemployed people between the ages of 15 and 24, a youth unemployment rate of 20%. If that rate has increased, it would be very bad news for a government that pitches itself to aspirational, young India.
German cartoon on India overtaking China on population numbers - Has Jaishankar summoned the German ambassador?
German Magazine`s `Racist` Cartoon `Mocking` India Irks Netizens
With India set to overtake China in terms of population, a 'racist' cartoon reportedly published by German magazine 'Der Spiegel' to depict the demographic change has irked Indians. The cartoon shows an overloaded train with people sitting atop it holding a tricolour while a Chinese bullet train is seen behind on another track probably showing China with technological advancement and India with old-age infra.
However, the cartoon has not gone well with Indians and several prominent leaders criticised the 'racist' depiction. Senior Adviser, Ministry of Information & Broadcasting, Kanchan Gupta said, "Hi Germany, this is outrageously racist. @derspiegel caricaturing India in this manner has no resemblance to reality. Purpose is to show #India down and suck up to #China. This is as bad if not worse than the racist cartoon in @nytimes lampooning India’s successful Mars mission."
India has been a somewhat elusive market for Apple. Cook has been "optimistic" about the country for some time but government regulation and COVID-19 have slowed the company's plans for a physical presence.
India has strict rules around foreign entities doing business. Its government has become more liberal in letting in foreign retailers but there was, nonetheless, "a mandate that 30% of the sourcing should be done locally," Prachir Singh, senior analyst at Counterpoint Research, told Insider.
When the government relaxed this clause slightly in 2018, this finally allowed Apple to start planning for a physical store — but development paused due to the COVID-19 outbreak, he added.
This first store comes 14 years after Apple first opened in China, and Cook has sometimes compared the two markets.
"I see a lot of similarities to where China was several years ago. And so I'm very, very bullish and very, very optimistic about India," Cook told investors on an earnings call in 2017.
Is he right? We pulled together three charts breaking down Apple's risk and opportunity in India.
Android phones remain the devices of choice for the Indian population, thanks to a wide range of choice and how cheap they can be. Apple devices remain the preserve of a minority — likely the country's ultra wealthy.
The gap between the two systems is dramatic compared to wealthier markets such as the US and the UK.
In 2022, Apple beat out Android to claim more than half of the smartphone market for the first time in the US, according to previous data from Counterpoint.
In the same year, Apple only took 6% of the market share in India compared to Android's 94%.
The chart above shows Apple's growth in China over the years. It looks small compared to Android and other operating systems, but that growth is impressive considering how many homegrown Chinese phone-makers it's up against. Huawei and Xiaomi in particular boast loyal consumers in their home market.
Apple has increased iOS device sales over the years to claim 17% market share from rivals, per Counterpoint Research's data.
That apparently small market share accounts for a disproportionate size of Apple's overall business. Greater China brought in 19% of Apple's revenue for its fiscal full-year 2022, per the firm's financials, making it the firm's third-biggest region behind the US and Europe.
For Cook, India could offer similar tantalizing growth.
Tarun Pathak, research director at Counterpoint Research, told Insider the Indian market presented an opportunity for Apple to target tens of millions of smartphone sales every year, increasing the 6 million units it currently sells.
"Comparatively, Apple sells more than 50 million units annually in markets such as China and USA. So, India has the potential to reach that scale from a domestic demand perspective in the coming years," he said.
There is a major area where China differs from India: how much its citizens have to spend.
Not only does China boast more billionaires than India, but the country also has a much bigger growing middle class.
Our chart shows wealth distribution by region — anyone in the top 1% is a US dollar millionaire. India has a much larger proportion of its population in the lower percentiles of wealth. China has a higher concentration of wealthier citizens.
As noted by analysts at Credit Suisse who compiled this data for 2022, India does have "significant" numbers of citizens in the upper echelons of wealth.
But, overall, Indian citizens have less disposable income than their counterparts in China, the US, or Europe, per World Bank data.
They have less cash to spend on pricey gadgets — and they have historically been even more expensive in India.
Apple's products have been available online in India for years, but are more expensive due to import fees and taxes. In 2022, the iPhone SE 2022 sold for a minimum of Rs 43,900, around $534, in India compared to around $380, around Rs 32,000, in the US, per CNBC.
All of that suggests growth will be slow. Pricing may fall as Apple ramps up Indian manufacturing, and Indians are becoming increasingly willing to pay more for their phones.
"There was an increase of 18% in average selling price for the first 2 months of 2023 compared to the previous year," Counterpoint's Pathak said. "In 2022, the share of premium segment smartphones (>INR 30,000 or around $360) has crossed the 10% mark for the first time, reaching 11%."
Pathak added that financing schemes could also encourage Indians to buy iPhones.
India’s population should reach about 1.429 billion by mid-2023, slightly higher than China’s 1.426 billion people, according to a new estimate from the United Nations. According to Pew Research, people under the age of 25 account for more than 40% of India’s population—at a time when the U.S. and China are rapidly aging.
However, the rosy comparisons stop there. While India was the fastest-growing of the five largest world economies in 2022, real spending power still lies largely in the hands of a lucky few. India’s gross domestic product per capita was just $2,257 in 2021 against China’s $12,556 according to the World Bank. The scope for discretionary spending is much more limited than in China or even Indonesia, according to HSBC. India’s wage earners often have more mouths to feed, the bank says, given low female labor-force participation and large family sizes.
Even so, consumption rather than investment disproportionately drives growth. And high unemployment remains an enormous challenge, largely because India’s private sector remains cautious about investing in the formal economy.
The unemployment rate was 7.8% in March 2023, according to the Centre for Monitoring Indian Economy, an independent think tank in Mumbai. That rate has remained at around 8% for most of the past four years. And that is particularly concerning, given India’s very low labor-force participation rate—at only about 40% according to official data.
Education is also a challenge. Leaving aside those from the country’s top engineering and management schools, Indian college graduates often struggle to find jobs. Last year, business advisory Wheebox found that only 47% of male graduates it tested passed its National Employability Test. Fifty-three percent of female graduates passed.
More manufacturing jobs and increasing female labor-force participation would help. Mahesh Vyas, the chief executive of the Centre for Monitoring Indian Economy, says India needs to create an environment that encourages large-scale private-sector investment—something that has been absent for several years now, he says.
In contrast, China has been extraordinarily successful at funneling its enormous population into the global manufacturing labor force. Manufacturing was 27% of China’s economy in 2021 versus just 14% of India’s, according to the World Bank. And while New Delhi’s recent policies to boost Indian manufacturing have met with some marked successes, much more is still needed—especially heavier infrastructure investment and labor market reforms.
Time is of the essence. While India looks young now, the nation’s population could peak as early as 2047, according to the U.N.
With the West increasingly leery of China and that nation’s own demographic dividend ebbing, India stands at a crossroads. It will either leverage its enormous human resources to become a superpower—attracting enormous investment inflows in the process—or miss the moment and scuttle its potential
by Pankaj Mishra
The country may have more people than China. But it won’t become a major economic, scientific and technological power without more technocrats.
In a historical shift, India is surpassing China to become the world’s most populous country. But the question of whether India can realize its demographic dividend and outperform ageing China economically does not go far enough. More attention is due to a fundamental and oddly neglected issue: whether India’s government has the technocratic capacity to transform the country into a major economic, scientific and tech power like China.
For more than half a century since Mao Zedong’s calamitous Cultural Revolution, well-educated leaders have mapped China’s trajectory to modernization. Mao devised quack solutions for China’s challenge of rapid industrialization, such as making steel in family backyards. But his colleagues began to check his ideological excesses even while he was alive. Since Deng Xiaoping’s momentous tenure, China has seemed able to tap its available intellectual potential no matter who is in power. Cheng Li, director of the John L. Thornton China Center at the Brookings Institution, argues in a forthcoming book that Chinese President Xi Jinping, considered more autocratic than his predecessors, has empowered a new generation of experts in IT, aerospace, 5G, robotics, AI and more. Many of these technocrats have experience competing globally at China’s state-owned enterprises.
Observers of India will struggle to find a comparable consolidation of talent at the highest levels of the country’s political and economic leadership. India’s civil service, unlike China’s, is a legacy of British rule. Originally meant to enforce law and order and collect revenue, it implements welfare schemes and development plans now. Though increasingly diverse, this bureaucracy does not seem as well-equipped as China’s to tackle complex challenges.
This is hardly because India lacks talent. A handful of educational institutions in India have produced arguably the most impressive global intelligentsia of any non-Western country. Indians today occupy senior positions across Western academic, financial and corporate institutions. Indeed, the Chinese diaspora in the West, though longer established, can’t match the impact and visibility of the Indian diaspora. Yet, it would be misleading to draw a picture of India’s intellectual capacity and potential by looking at Sundar Pichai of Google and Microsoft’s Satya Nadella. Indeed, they are a reminder of how much Indian talent exists outside of India (or is eager to leave).
The occasional homecoming is rarely successful. Take, for instance, Raghuram Rajan, former chief economist at the International Monetary Fund. Invited in 2013 by former Prime Minister Manmohan Singh to head the Reserve Bank of India, Rajan returned to the US in 2016. His criticism of crony capitalism and ideological extremism in India did not endear him to the regime led by Prime Minister Narendra Modi. Since Rajan’s departure, new appointees appear to have compromised the independence of India’s central bank, with other major institutions, from financial regulatory bodies to universities and security and intelligence agencies, are not faring much better.
by Pankaj Mishra
Facts and data in India often appear increasingly fudged; political expediency seem to have blocked even a routine national census that would shed light on India’s population. Today, it’s questionable whether a system of government that hinges on power of the kind Modi wields can help accelerate India’s modernization beyond a point, no matter how many infrastructure projects he inaugurates. Nor can this essential task be left to the ‘invisible hand’ of the market. China has powerfully demonstrated that nations that start belatedly on the task of economic modernization need long-term policy and coordinated action by a dedicated national elite consisting of bureaucrats and technocrats as well as political leaders.
Modi’s own educational credentials aren’t the issue. Nor is his Bharatiya Janata Party’s Hindu nationalism an obstacle by itself. Pragmatic-minded nationalists can learn on the job. But the regime displays elements of Mao-style, arbitrary decision-making, illustrated pointedly by India’s devastating policy of demonetization. The ruling party also seems to have prioritized its own cultural revolution against India’s previous, highly educated ruling class above all else. After nine years in power, references are still made to the BJP being victimized by entrenched secular elites. What are seen as bastions of social and educational privilege often come under fire.
Rather than catching up with China, India seems to be replicating China’s past, when ideological fervour and indoctrination of the masses disastrously took priority over social stability, political cohesion and economic growth. The world’s new largest country may need fresh leaders before it can realize its immense intellectual as well as demographic dividend.©bloomberg
The cartoon shows a dilapidated Indian train - overflowing with passengers both inside and atop coaches - overtaking a swanky Chinese train on a parallel track.
It is being seen as mocking India as the country overtakes China to become the world's most populous nation.
Der Spiegel is a weekly news magazine.
Many Indians have tweeted, saying that that the magazine was stuck with an outdated idea of India and hadn't recognised the progress made by the country in recent decades.
Federal minister Rajeev Chandrasekhar tweeted: "Notwithstanding your attempt at mocking India, it's not smart to bet against India under PM @narendramodi ji. In a few years, India's economy will be bigger than Germany's."
Kanchan Gupta, senior adviser in the ministry of information and broadcasting, tweeted that the cartoon was "outrageously racist". Another Twitter user said the cartoon showed the magazine's "elite mindset".
The magazine has not reacted to the criticism.
While overcrowded trains can still be seen in many parts of India, significant investments have been made to improve the country's railway network and its trains.
Cartoons published by Western media have caused outrage in the country earlier as well. The New York Times newspaper had apologised in 2014 for a cartoon on India's Mars Mission following readers' complaints that it mocked India.
The cartoon showed a farmer with a cow knocking at the door of a room marked Elite Space Club where two men sit reading a newspaper. It was published after India successfully put the Mangalyaan robotic probe into orbit around Mars.
India is now the world's most populace country and will likely soon become the third largest economy on the globe. For decades, economists have been predicting that India's time would come. Has it finally arrived?
Modi likes to act as though he alone is responsible for that trend. And as it happens, he embodies the hope that anyone can make it. The 72-year-old is from a lower caste and his father used to serve tea on the train platform of a small-town station in the west of the country. Now, his son has accumulated more power than almost any other prime minister before him. During the election campaign, he bragged about the size of his chest (142 centimeters), but he is also the first premier to have been born after India’s independence. When traveling overseas, he prefers speaking Hindi to English, transmitting an encouraging message to his countrymen – that they should be proud of where they are from.
Many in the country venerate him for precisely that reason, with the result that Modi’s party, the Bharatiya Janata Party (BJP) enjoys an absolute majority in parliament. It is considered highly likely that he will once again emerge victorious in next year’s parliamentary election.
Modi has convinced his country that India can only return to past greatness under his leadership – back to a time before the arrival of the British, who sucked the country dry for 200 years. It is the promise that the ignominy of yesteryear will finally fade into the past for good. And India will command that which it so desires: recognition.
The prime minister, though, is convinced that India must remain true to the values of an ancient Hindu civilization. He is a Hindu nationalist and sees India first and foremost as the homeland of the Hindus. Minorities such as Muslims and Christians have a place in his new India, but only if they conform to the rules of the majority.
Modi is even using his current G-20 presidency to further his narrative of India’s rebirth. Posters bearing his visage are hanging everywhere in the country along with statistics testifying to the country’s success. Not all of the numbers, however, are reflective of reality, and not all of the successes have been the result of his initiatives. He has, however, proven adept at implementing them.
Still, the rise might not be quite as rapid as the meteoric explosion undergone by China. Economist and author Niranjan Rajadhyaksha believes it realistic to expect the Indian economy to grow by 6.5 percent annually over the next decade – which is certainly strong, but not equal to the double-digit growth China has repeatedly experienced.
Still, India’s rise is good news for the West. Within several years, the country is likely to become the world’s third largest economy behind the U.S. and China, essentially becoming a third economic anchor in a multipolar world. India would have weight and its actions would have consequences.
In recent years, India has grown ever closer to the West, even though it won’t likely ever become a close ally. The country doesn’t necessarily share all of the West’s values, and approaches the world pragmatically – in the search for partners rather than friends. But India also isn’t a country harboring dreams of annexing islands or pushing the U.S. off of its throne. And it shares American and European concerns about Chinese dominance in Asia.
As such, India’s rise could ultimately transform the world in a way that is more amenable to the West’s vision of the future.
For the first time since the mid-18th century, China isn’t the world’s most populous nation. According to United Nations projections, India claims that mantle this month as its population touches 1.425 billion.
Many in the West would like India to catch up economically with China and emerge as a powerful democratic counterweight in Asia. But for this dream to become reality, India must do a better job of educating its people and industrializing its economy.
Not long ago, educated Indians largely considered the country’s burgeoning population a liability, not an asset. But many now argue that India’s young population gives it an edge over China that will persist for decades. China’s population has already begun to decline. The United Nations projects India’s to peak at 1.7 billion in 2064.
To a large extent, optimism about India hinges on the idea of a “demographic dividend.” The theory, Mr. Eberstadt explains, is that this is a once-in-history chance for a population to move swiftly from short life expectancy and big families to long life expectancy and small families. In India, the labor force is growing more rapidly than the total population, which could translate into higher savings and investment rates and more rapid economic growth. South Korea and Taiwan are examples of Asian countries that swiftly made this transition from poor to rich.
Before India can dream of emulating their success, or China’s, it must acknowledge the size of the challenges it faces. Only about three-fourths of India’s population is literate, a level that China surpassed about 40 years ago. According to Mr. Eberstadt, this makes India the only country in history to have a vast pool of college graduates living amid hundreds of millions of working-age people who have never been to school. Moreover, over the past three decades regional disparities have widened. Kerala in the south has human-development indicators akin to Brazil. Bihar in the north looks worse than Cambodia.
Or take female labor-force participation, another measure of economic development. In China it’s more than 60%—roughly the same as in the U.S. and other wealthy countries. In India it has declined from 28% in 1990 to 23% in 2021. More than two-thirds of Chinese live in cities, which tends to boost productivity. India remains overwhelmingly rural—only about a third of the population lives in cities.
Industrialization also matters. Apart from a few resource-rich countries like Qatar and Saudi Arabia, all rich nations have successfully moved large numbers of people from farms to factories as they developed. Despite Mr. Modi’s calls to “Make in India,” manufacturing as a percentage of Indian gross domestic product declined from 16% in 2011 to 14% in 2021. As a proportion of employment, India’s industrialization peaked in 2002. Almost half of the Indian workforce makes subsistence livings on small family farms, compared with only about 25% of Chinese and 1% of Americans. In 2019, amid persistent protests, Mr. Modi rolled back ambitious agricultural reforms that would have helped modernize farms.
On the upside, India has massive room for improvement. If the country gets everything right it could grow robustly for decades. But to catch up it will need to redress many of its failures. “The critical thing to remember,” Mr. Eberstadt says, “is that demographic dividends don’t always get cashed.”
#Delhi Won’t Side With #Washington Against #Beijing. #India’s significant weaknesses versus #China, & its inescapable proximity to it, guarantee that Delhi will never involve itself in any #US confrontation with Beijing. #BJP https://www.foreignaffairs.com/india/americas-bad-bet-india-modi
by Ashley Tellis
For the past two decades, Washington has made an enormous bet in the Indo-Pacific—that treating India as a key partner will help the United States in its geopolitical rivalry with China. From George W. Bush onward, successive U.S. presidents have bolstered India’s capabilities on the assumption that doing so automatically strengthens the forces that favor freedom in Asia.
The administration of President Joe Biden has enthusiastically embraced this playbook. In fact, it has taken it one step further: the administration has launched an ambitious new initiative to expand India’s access to cutting-edge technologies, further deepened defense cooperation, and made the Quad (Quadrilateral Security Dialogue), which includes Australia, India, Japan, and the United States, a pillar of its regional strategy. It has also overlooked India’s democratic erosion and its unhelpful foreign policy choices, such as its refusal to condemn Moscow’s ongoing aggression in Ukraine. It has done all of this on the presumption that New Delhi will respond favorably when Washington calls in a favor during a regional crisis involving China.
India’s priority has been to receive American assistance in building up its own national capabilities so it can deal with threats independently. The two sides have come a long way on this by, for example, bolstering India’s intelligence capabilities about Chinese military activities along the Himalayan border and in the Indian Ocean region. The existing arrangements for intelligence sharing are formally structured for reciprocity, and New Delhi does share whatever it believes to be useful. But because U.S. collection capabilities are so superior, the flow of usable information often ends up being one way.
The fundamental problem is that the United States and India have divergent ambitions for their security partnership. As it has done with allies across the globe, Washington has sought to strengthen India’s standing within the liberal international order and, when necessary, solicit its contributions toward coalition defense. Yet New Delhi sees things differently. It does not harbor any innate allegiance toward preserving the liberal international order and retains an enduring aversion toward participating in mutual defense. It seeks to acquire advanced technologies from the United States to bolster its own economic and military capabilities and thus facilitate its rise as a great power capable of balancing China independently, but it does not presume that American assistance imposes any further obligations on itself.
As the Biden administration proceeds to expand its investment in India, it should base its policies on a realistic assessment of Indian strategy and not on any delusions of New Delhi becoming a comrade-in-arms during some future crisis with Beijing.
Married off by her parents at 14, Indian mother-of-seven Jaimala Devi kept having children because her husband insisted she could only stop once she had given birth to two sons.
Devi's story is common across Bihar, the poorest state in the world's most populous country and also its fastest-growing: with around 127 million people, it already has roughly as many people as Mexico.
India's overall birthrate has fallen in tandem with its rising economy, but poverty and a deep-rooted bias for male heirs have kept Bihar an engine room of national population growth.
"Having seven kids and managing everything on my own really drives me crazy at times," said Devi, who at 30 has never left her home village.
"I thought we'd be comfortable with one or two kids," she told AFP. "But we had girls first, and because of that we have seven."
Devi, her five daughters and two sons live in a ramshackle one-room hut, unadorned except for a small television, an old fan and some posters of Hindu deities on its unplastered walls.
Bihar has scarce opportunities for well-paid employment and Devi's husband Subhash is gone for most of the year, sending back his meagre earnings as an unskilled storehand in the capital New Delhi.
Many fathers leave the state to find work elsewhere but consider long absences from home and the struggle to feed their children a worthy sacrifice for the chance of future prosperity.
"Having more children is still considered a way to get more earning members for the family," Parimal Chandra, the state head of the non-profit Population Foundation of India (PFI), told AFP.
The insistence by many men on having sons reflects cultural expectations that they will support their parents even after marrying and having their own children.
"Giving birth to a boy means respect and pride for the family and the mother," Chandra said.
Daughters by contrast are commonly seen as burdensome and costly due to the tradition of wedding dowries paid by the parents of brides.
Parents in poorer households often seek to relieve themselves of the responsibility of girls by marrying them off early, as was the case in Devi's wedding as a teenager.
This is especially true in Bihar, where the early departure of girls from school has left only 55 percent of women in the state able to read and write -- India's lowest female literacy rate, according to the National Family Health Survey.
Chandra said this "abysmal" statistic undergirded the state's high birthrate, leaving mothers without access to knowledge on contraception or agency over the size of their families.
Bihar's situation was once replicated across India, a country formerly synonymous with grinding poverty but which in recent decades has seen phenomenal economic growth.
The average woman in India now gives birth to just two children, down from a 1960 peak of six, in concert with better maternal healthcare and rising living standards.
But Bihar has long been an economic laggard and its much higher birthrate -- around three children per mother on average -- reflects some of India's worst rates of malnutrition, child mortality, education and access to medical care.
Raj Kumar Sada, 55, has outlived four of his five children and often tells his only surviving son to have at least four kids of his own.
That way "if something happens to one or two of them, he'd still have someone left," he told AFP.
"You will find people with four, five, six, seven or eight children, and it is very normal here."
India’s relationship with Russia remains steadfast as both sides seek to deepen their economic engagements.
But Moscow has also grown close to Beijing since invading Ukraine, and that raises critical national security concerns for New Delhi, say observers.
India’s leaders are “carefully watching” as Russia becomes more isolated and moves closer to “China’s corner,” said Harsh V. Pant, vice president for studies and foreign policy at Observer Research Foundation, a New Delhi-based think tank.
It appears “this relationship is going down from being a very high-value strategic partnership to a transactional one,” said Sreeram Chaulia, dean of the Jindal School of International Affairs, adding Moscow’s “tighter embrace of China” doesn’t bode well for India’s national security needs.
India’s relationship with Russia remains steadfast as both sides seek to deepen their economic ties. But Moscow has also grown close to Beijing since invading Ukraine, and that raises critical national security concerns for New Delhi.
Indian external affairs minister S. Jaishankar recently said the country was ready to restart free trade negotiations with Russia.
“Our partnership today is a subject of attention and comment, not because it has changed, but because it has not,” he said, describing the relationship as “among the steadiest” in the world.
Russia also wants to “intensify” free trade discussions with India, Deputy Prime Minister Denis Manturov said during a visit to Delhi. Manturov is also Moscow’s trade minister.
Despite the display of economic cooperation, India’s leaders are “carefully watching” as Russia becomes more isolated and moves closer to “China’s corner,” said Harsh V. Pant, vice president for studies and foreign policy at Observer Research Foundation, a New Delhi-based think tank.
Russia’s “weak and vulnerable position” and growing reliance on China for economic and strategic reasons, will definitely be worrying for India, he told CNBC.
It’s becoming “more difficult with every passing day because of the closeness that we are witnessing between Beijing and Moscow,” Pant noted. “The pressure on India is increasing, it certainly would not like to see that happen.”
New Delhi will try as much as possible to avoid a potential “Russia-China alliance or axis,” Pant added. “As that will have far reaching consequences and will fundamentally alter India’s foreign policy and strategic calculation.”
There are national interest reasons “why India continues to buy cheap Russian oil and trade with them, this FTA is part of that,” said Sreeram Chaulia, dean of the Jindal School of International Affairs in New Delhi.
But it appears “this relationship is going down from being a very high-value strategic partnership to a transactional one,” he noted, adding Moscow’s “tighter embrace of China” doesn’t bode well for India’s national security needs.
India, which holds the current G-20 presidency, still hasn’t condemned Russia over its invasion of Ukraine.
“India is getting this free pass on account of China," said Manoj Joshi, a fellow at the Observer Research Foundation in New Delhi who has advised previous Indian administrations on national security issues. “The only country in Asia, in terms of size and potential, that can balance China is India."
The Biden administration has decided to remain publicly quiet on India’s democratic backsliding, according to senior US officials, as the US intensifies efforts to keep New Delhi on its side in the rivalry with China.
Indian Prime Minister Narendra Modi’s pressure on religious minorities and the media is troubling, as is his party’s targeting of opposition lawmakers, said the officials, who asked not to be identified discussing internal deliberations. But the decision to largely refrain from criticizing Modi comes as growing concerns about China make India increasingly crucial to US geopolitical and economic goals in the Indo-Pacific.
The decision on handling India is an example of how President Joe Biden’s emphasis on human rights — and his framing of a global conflict between democracies and autocracies — has run up against the strategic realities of a world where rivals such as China and Russia are vying for greater control.
So while New Delhi’s strong defense ties with Russia and its vast purchases of Russian crude have drawn scrutiny from US lawmakers after the invasion of Ukraine, the administration believes it needs India to buy that oil to keep prices low. And rising concerns about China’s growing assertiveness under Xi Jinping have helped drive the US and India even closer together, these people said.
“India is getting this free pass on account of China," said Manoj Joshi, a fellow at the Observer Research Foundation in New Delhi who has advised previous Indian administrations on national security issues. “The only country in Asia, in terms of size and potential, that can balance China is India."
In a sign of the close ties, Biden is set to host Modi for a state dinner in Washington this summer. While Biden might press Modi to take a more explicit stance on Ukraine, one US official said it’s doubtful New Delhi would publicly rebuke Russia, given their close defense ties.
Asked whether the administration is reluctant to criticize Modi, John Kirby, spokesman for the National Security Council, said in a statement, “As we do with other nations around the world, we regularly engage with Indian government officials at senior levels on human rights concerns, including freedom of religion or belief."
US officials also have frequently pointed to India’s shipments of humanitarian aid to Ukraine as well as Modi’s comments to Russian President Vladimir Putin that “today’s era is not one for war."
India’s foreign ministry declined to comment. Indian Foreign Minister Subrahmanyam Jaishankar has made no secret of his country’s decision not to pick sides regardless of what others may want, echoing India’s Cold War leadership of what was called the “non-aligned movement."
“Whether it is the United States, Europe, Russia or Japan, we are trying to ensure that all ties, all these ties, advance without seeking exclusivity," Jaishankar said during a visit to the Dominican Republic last month.
As India eclipses China as the world’s most populous country with more than 1.4 billion people, the Biden administration believes it’s impossible to solve pressing global challenges such as climate change without New Delhi, one official said, and the country remains a central part of the US’s Indo-Pacific strategy.
That’s led to the relative silence on issues that the US would normally speak out about publicly, and loudly.
Most recently, India’s government banned a critical documentary about Modi released by the BBC and sent federal tax authorities to raid the British news organization’s Delhi office.
Modi’s Hindu nationalist Bharatiya Janata Party also won a defamation case against the main political opposition leader, Rahul Gandhi, that has seen him kicked out of parliament. Modi’s government has also choked local and international nongovernmental organizations of foreign funding.
Other Indian moves also run against a greater strategic alignment with Washington: In recent months, India pledged closer defense ties with Russia. Although India has sought to scale back purchases of some Russian weapons, its military has more than 250 Russian-designed fighter jets, seven Russian submarines and hundreds of Russian tanks. It has also received Russian S-400 missile defense systems despite US efforts to keep those purchases from going forward.
“President Biden would be remiss if he doesn’t raise the Russia issue and restate the importance of supporting Ukrainian sovereignty and explain why that is important for the Indo-Pacific region," said Lisa Curtis, who was the National Security Council senior director for South and Central Asia under former President Donald Trump.
“It’s no use pretending we don’t have serious differences on such a crucial issue," said Curtis, who directs the Indo-Pacific Security Program at the Center for a New American Security.
The US has also moved on from concerns about India’s vast purchases of Russian crude oil even as the country rejects a Group of Seven initiative to put a cap on the price for which it’s sold.
At one meeting in Delhi between US and Indian officials following the invasion of Ukraine, a US diplomat told a senior Indian official that if their refiners weren’t buying Russian crude and putting it back on global markets, oil prices might have soared to about $180 a barrel, according to a person familiar with the meeting.
Indian officials always viewed Western criticism of their oil purchases as hypocritical, given that Indian refiners do simply put the product on global markets — in many cases for US and European buyers.
Jaishankar, the foreign minister, has often invoked broader sentiment in the so-called Global South as he defended his country’s position on Ukraine amid soaring food and energy prices that have put immense pressure on poor countries. He has waved off US concerns about India’s human rights record, saying “people are entitled to have views about us."
The US’s positioning on India reflects a calculation it’s had to make several times in the past, most prominently with Saudi Arabia. After declaring during his presidential campaign that he would declare Saudi Arabia a “pariah," Biden has had to backtrack as he seeks the kingdom’s help countering Iran and keeping oil prices low.
“I can understand governments’ reluctance" to take on Modi," said Shashi Tharoor, a senior lawmaker in the opposition Congress Party. “There’s an overriding strategic interest on the part of the West, and other countries in Southeast Asia, in staying on the right side of India."
According to research firm the International Data Corporation (IDC), 31m smartphones were shipped in India during the first three months of this year.
That was 16% lower than in the same period of 2022 and the lowest first-quarter shipments in four years.
IDC highlighted that the sluggish demand came amid an uncertain economic outlook and as stockpiles of handsets remain high.
It also said that India's overall smartphone market will be flat this year after three quarters in a row of falling sales.
At the same time some analysts have pointed to the growing trend of "premiumisation" - when wealthier consumers move towards more expensive products.
"The premium segment's share almost doubled" in the first three months of this year compared to a year ago, according to Prachir Singh from technology market research firm Counterpoint.
However, as brands like Apple and Samsung benefit from this trend, demand for cheaper handsets made by companies like China's Xiaomi and Realme has been hit by the tough economic environment.
That end of the market is suffering as users take longer to upgrade their handsets, experts say.
The stark contrast between Apple's fortunes and the shrinking market for cheaper devices also reflects an uneven post-pandemic recovery in Asia's third largest economy.
"The K-shaped recovery is not allowing the consumption demand to become broad-based nor helping the wage growth especially of the population belonging to the lower half of the income pyramid," India Ratings and Research said.
"As a result, while there is visible demand for high-end automobiles, mobile phones and other luxury items, demand for items of mass consumption is still subdued," it added.
For example, sales of entry-level scooters were down by almost 20% in April this year, compared to the same month in 2019, before the pandemic hit.
This indicates that lower income customers "were are still hesitant to upgrade," according Manish Raj Singhania, the president of the Federation of Automobile Dealers Associations.
It also reflects the on-going problems in India's rural economy, which have been worsened by extreme weather events.
Lack of demand in rural areas has also been driving the decline in the consumer goods, like snacks and fizzy drinks, where growth has dropped to single figures after a year and a half of double-digit increases.
Household spending on goods and services, which had grown 20% year on year in March 2022, has also slowed sharply this year.
That came as India's consumers have been squeezed by rising interest rates and stubbornly high inflation.
Overall, the country's economic growth slowed to 4.1% for the first three months of 2023, the lowest growth for a year, official figures show.
By Max Boot
Smith argues that, thanks to recent investments in infrastructure, “India has most of the raw ingredients necessary to industrialize.” India should receive a major boost from Western firms eager to move supply chains out of China amid U.S.-China tensions. “In 2021,” Smith notes, “only 1% of iPhones were made in India; two years later, it’s approaching 7%, with a planned increase to 40-45%.” Already more than 750 million Indians use the internet — more than twice the total U.S. population — and those numbers will only continue to grow. “When a country has 1.4 billion people, a booming economy, and an open society,” Smith concludes, “there’s really very little limit to its potential influence.”
Not so fast, counters Sadanand Dhume of the American Enterprise Institute. During an interview with me (and in an op-ed in the Wall Street Journal), he points out that India faces major obstacles to realize its potential.
India’s education system, Dhume notes, lags far behind China’s. Only about three-quarters of Indians are literate, compared with nearly all Chinese. India does even worse at utilizing women in the workforce: At just 19 percent, its female labor-force participation rate is one of the lowest in the world — and far behind China’s 61 percent. Manufacturing’s share of India’s economy actually declined between 2000 and 2021. Dhume writes: “Almost half of the Indian workforce makes subsistence livings on small family farms, compared with only about 25% of Chinese and 1% of Americans.”
To his credit, Narendra Modi is the most pro-business prime minister India has ever had. He has been building infrastructure at a breakneck pace and trying to simplify the mind-boggling regulations known as the “license raj” that impede the private sector — and fuel corruption. But, as a Hindu nationalist, Modi has favored domestic firms (“national champions”) and boosted tariffs as part of his “Make in India” campaign. That makes India less attractive as a destination for multinational companies that want to assemble high-tech goods with parts from all over the world.
Modi is also undermining Indian democracy — his party just expelled the opposition leader from Parliament — and turning India’s 200 million Muslims into second-class citizens. No country can afford to sideline so much potential talent, especially given the discrimination already suffered by 200 million low-caste Hindus (the Dalits or “untouchables”).
Tellis told me that “India’s population ‘achievement’ suggests that it still remains the only Asian power with the natural capacity to balance China, if — and it is a big if — it can get its act together.” But, he added, “Although the U.S. should continue to partner with India to balance China in the Indo-Pacific, it will inevitably have to bear a disproportionate responsibility for successfully maintaining an Asian balance of power.”
by David Dodwell
a further factor has been America’s remorseless efforts to slow China’s rise, and to reduce the ever-widening range of Chinese goods on which US manufacturers and consumers have come to rely. Every attempt to devise a credible decoupling, diversification or derisking strategy points Joe Biden’s team inevitably to India – the only economy with a big enough market and workforce to develop the economies of scale needed to have a hope of competing against China.
But India, for more than 40 years, has remained a miracle about to happen. Back in the 1980s, along with thousands of other Western companies, my then-employer the Financial Times was wrestling with how best to focus its Asian expansion plans: prioritise Hong Kong, focused on the China market, or in Mumbai, focused on India?
For FT bosses, the answer was obvious: India was the world’s largest English-speaking market, the world’s most populous democracy, and home to one of the world’s largest equity markets. It also had long-standing links with Britain.
Arguments that China’s leadership was far more pragmatic and seriously committed to opening up to international trade and investment, with the foundations of an urban-industrial psychology that contrasted with India’s profoundly rural-agrarian mindset, were brushed aside. To the best of my knowledge, the FT is still battling to publish in India.
My deep doubt that India can become a top-table power that might serve as a democratic counterweight to China was forged in the 1970s by social scientist Barrington Moore’s Social Origins of Dictatorship and Democracy.
In asking why India failed to succumb to a Marxist revolution after independence in 1947, while China emerged under Mao Zedong as a radically transformed Marxist power, Moore identified a wide range of powerful inertial forces in India that prevented revolution and shackled economic change – and continue to do so even today.
Perhaps most important were the rural power structures cemented around caste, which still exert more influence over social and economic development than most economists recognise.
In China, revolution swept away ancient power structures, entrenched corrupt networks and ossified vested interests. Corrupt networks could regrow but the inertial undergrowth that had for a century choked change in China had been cleared, opening the country to a potential for change.
The absence of revolution in India left in place existing power structures and long-standing vested interests, along with the corruption they nurtured, blocking the radical political or economic changes that turbocharged China’s economic growth from the late 1970s. Corruption remains a scourge in India and a nagging obstacle to growth.
by David Dodwell
There is magical thinking among forecasters who talk of an “Indian century”, with Modi’s India set to overtake China, not simply in population but as a dynamo for global growth.
Alok Sheel, a former secretary of India’s Economic Advisory Council, injected some much-needed realism: “If India were to grow at the very optimistic, and currently unlikely, rate of 9 per cent going forward, and China were to slow down to 4 per cent, the Indian economy would be 70 per cent of China’s size by mid-century.”
So many factors sit in the way of sustainable strong growth in India. Nearly 43 per cent of the population works in the farming sector, compared to 25 per cent in China. Underemployment, much of it informal and undocumented, hampers any pathway to higher productivity.
While India’s education spending is higher than in China (as a percentage of government expenditure), literacy remains at 74 per cent, compared with 97 per cent in China, with almost 27 per cent of India’s population lacking any formal education. Women account for a large share of the illiterate, contributing to the reality that just 19 per cent of women participate in the workforce, compared with 61 per cent in China.
A failure to spend adequately on education, health, social welfare and other key infrastructure also shackles progress. Just 46 per cent of Indians have access to safe sanitation (compared with 70 per cent in China), and only 43 per cent have access to the internet (70 per cent in China).
One can juggle data ad nauseam, but the reality of the past 40 years remains unchanged: Indian progress is welcome but slow, and the country will continue to lag behind China.
The rising economic heft of the Global South will give India a seat at top tables like the G20, but there is no way Biden can magically think away the reality of China as a global economic force. The 21st century may not be India’s century, but it is almost certainly Asia’s century, and Washington needs to come to terms with that.
David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades
India is also benefiting from worsening relations between Washington and Beijing. Companies are looking to shift supply chains out of the People’s Republic, while money managers need a place to deploy long-term funds with fewer risks of financial sanctions.
In some cases, the pivot is stark: Apple suppliers Foxconn (2317.TW) and Pegatron (4938.TW), for example, are building factories in Karnataka and Tamil Nadu. JPMorgan analysts reckon India will make one in four iPhones within two years, even though manufacturing costs are higher than in China. Ontario Teachers’ Pension Plan, Canada’s third-largest retirement fund, closed part of its China equity investment team based in Hong Kong in April, seven months after opening an office in Mumbai.
MUMBAI, May 9 (Reuters Breakingviews) - Indian tycoons and financiers are sitting back as global business comes to them for a change. Apple (AAPL.O) CEO Tim Cook, Microsoft (MSFT.O) boss Satya Nadella and Blackstone (BX.N) President Jon Gray have all visited India this year. They are lured by a country whose potential as an alternative investment destination to China increasingly outweighs the local challenges of doing business.
Visitors see many attractions. India’s $3 trillion economy is forecast to grow by 6.5% this fiscal year, continuing to outpace the rest of the world. Plentiful imports of cheap Russian oil are keeping inflation in check. Meanwhile, the workforce of the world’s most populous country offers low costs, high numbers of technology engineers, and hundreds of millions of people who speak English.
Executives and investors also see a business-friendly government that is likely to remain in power for the next half-decade. Opinion polls suggest Prime Minister Narendra Modi will win a third term next year: the biannual Mood of the Nation survey, published in January, found 72% of respondents rated Modi’s performance as good, up from 66% in August. If he wins re-election with an outright majority, businesses would not have to worry about unpredictable coalition politics.
Yet India is also benefiting from worsening relations between Washington and Beijing. Companies are looking to shift supply chains out of the People’s Republic, while money managers need a place to deploy long-term funds with fewer risks of financial sanctions.
In some cases, the pivot is stark: Apple suppliers Foxconn (2317.TW) and Pegatron (4938.TW), for example, are building factories in Karnataka and Tamil Nadu. JPMorgan analysts reckon India will make one in four iPhones within two years, even though manufacturing costs are higher than in China. Ontario Teachers’ Pension Plan, Canada’s third-largest retirement fund, closed part of its China equity investment team based in Hong Kong in April, seven months after opening an office in Mumbai.
India appeals as more than a manufacturing base, though. Its economy also dangles the promise of Chinese-style growth. GDP per capita was $2,379 in 2022, less than one fifth of its eastern neighbour. Over 1.2 billion people have mobile phone connections; half of which are smartphones. Morgan Stanley analysts and strategists expect India to become the world’s third-largest economy and stock market before the end of the decade.
India remains a tricky destination for international companies and investors. New Delhi has a long-standing fondness for import tariffs and is infamous for wrangling over tax with multinationals including Vodafone (VOD.L) and energy group Cairn.
This has not prevented others from enjoying success, though. Blackstone has assets worth $50 billion in the country. The U.S. firm led by Stephen Schwarzman is the country’s top owner of office and retail real estate, while India represents half its Asian private equity investments. The $3.8 billion of total capital in its Blackstone Capital Partners Asia I fund has earned a net internal rate of return of 29%.
India has traditionally wanted for overseas funds: it attracted 1% of the world’s foreign direct investment in 2021, compared with 9% for China and Hong Kong combined, according to the United Nations Conference on Trade and Development. Yet in a twist of fortunes, executives who spoke to Breakingviews now worry about overheating.
Heightened interest from investors will further push up prices in a country where stock valuations are already at a premium: the MSCI India Index trades at nearly 20 times one-year forward earnings, against 12 times for MSCI’s broader Emerging Markets benchmark. The arrival of large pools of capital ready to snap up real estate, hospitals and other assets will force existing investors to take on more complicated projects to maintain returns.
India is an easy place to miscalculate, too. Despite the prevalence of English and a powerful diaspora which includes the bosses of Alphabet (GOOGL.O) and Microsoft - two of the world’s four biggest companies by market capitalisation - the South Asian nation’s business environment remains poorly understood by many outsiders.
That was demonstrated earlier this year by the precipitous crash in stock prices of companies controlled by Gautam Adani following an attack by a short seller. While a good number of clients of top Indian and Wall Street institutions had largely steered clear of the tycoon’s listed vehicles, index compiler MSCI (MSCI.N) had given the conglomerate a 5% weighting in its India benchmark.
And while homegrown conglomerates like Adani and Mukesh Ambani’s Reliance Industries (RELI.NS) highlight the business potential of meeting India’s need for infrastructure and consumer goods, they also promise cutthroat competition. That’s one reason multinationals eager to plant a flag in the country - including TotalEnergies (TTEF.PA), Meta Platforms (META.O) and Foxconn – are teaming up with domestic players.
Growing concerns about China may be prompting investors to discount Indian risks. For example, executives and money managers reckon New Delhi can straddle the geopolitical divide without being punished by the United States, its top trading partner, while continuing to import energy and weapons from Russia.
Capital providers are looking past high-decibel domestic politics too. They are largely undeterred by opposition leader Rahul Gandhi’s recent disqualification from parliament following his sentencing in a defamation court case brought by a lawmaker from Modi’s Bharatiya Janata Party. An official probe against the BBC for alleged foreign exchange violations, which came after the British broadcaster released a critical documentary about Modi, was met with muted international condemnation.
Finally, investors and executives calculate that inequality between India’s rich and poor, a jobs market where less than half of the urban workforce has regular employment, and supply-chain inefficiencies resulting from poor infrastructure will either be resolved by market forces, or simply won’t impinge on their investments.
Ultimately, India’s increasing importance as an alternative to China gives investors a growing incentive to focus on what the South Asian country can offer, while paying less attention to past barriers. The India risk premium is rapidly disappearing.
At the lowest income levels, food is consumed in its most basic form as whole grain or in simple porridges. As incomes rise, that grain is increasingly consumed indirectly – it could be baked into bread or fed to animals for meat production. Each subsequent stage requires further processing, as well as additional ingredients such as oil and sugar to complete formulations.
exponential increases in higher-value food consumption take hold as incomes grow from US$1,000 and US$10,000 before plateauing above US$20,000. A large, young and rapidly growing population base with incomes rising from modest to median levels makes an ideal environment for agricultural commodity demand growth.
India recently overtook China as the world’s most populous country, according to UN projections. Around one in three people on the planet now lives within the borders of these two nations.
The media frenzy surrounding the revelation centred on the economic implications of India’s new status, much to the chagrin of the Chinese authorities. The question now arises as to what this means for the global agricultural market.
Since the dawn of the Malthusian spectre, population growth has been associated with a reduction in living standards. As the theory goes, populations grow faster than the resources required to feed them.
China has been able to defy that thesis in the past two decades, combining a growing population with consistent income growth. It has become the largest buyer of key agricultural commodities to ensure its inhabitants enjoy a diversified diet.
China is now a top importer of the most widely traded crops globally: soybeans, vegetable oil, corn and sugar. With that, Beijing wields enormous influence in this space. Chinese demand has caused explosive growth in South American soybean production, leading Brazil to pass the United States as the world’s leading producer of soybeans and prompting Argentina to become the top exporter of soybean meal.
May 31 (Reuters) - The Indian government is poised to deny crucial funding for Anil Agarwal's chip venture, Bloomberg News reported on Tuesday, a setback to the billionaire's ambition to build India's 'own Silicon Valley.'
The authorities are likely to inform the venture between Vedanta (VDAN.NS) and Taiwan's Foxconn (2317.TW) that it won't get incentives to make 28-nanometer chips, the report said, citing people familiar with the matter.
The venture's application seeking billions in government assistance hasn't met the criteria set by the government, the report said. The project is still in search of a technology partner and a manufacturing-grade technology license for the construction of 28nm chips, it added.
Foxconn declined to comment on the report, while India's technology ministry and Vedanta did not immediately respond to Reuters requests for comment.
The setback comes at a time when Agarwal's metals and mining conglomerate is already grappling with reducing its significant debt load.
Last year in September, Vedanta and Foxconn – formally called Hon Hai Precision Industry Co Ltd – announced they would invest $19.5 billion to set up semiconductor and display production plants in the state of Gujarat, creating more than 100,000 jobs.
"India's own Silicon Valley is a step closer now," Agarwal had said last year after the announcement.