THE RISE and FALL of NATIONS by Ruchir Sharma is an insightful book on changing landscape of world economies. At the eve of India's 70th Independence day, I found these data points on India very incisive. The following are extracts from his book.
Growth:
In the AC era, there are precious few nations that would qualify as rising stars by the standards of the BC era. In 2007, the year before the global financial crisis hit, the number of economies growing faster than 7% reached postwar peak at more than 60%, including China and India, and Russia. Currently, there are only 9 economies growing that fast, and only one of them is reasonably large: India.
In 1980, when there were only 124 countries on the Human Development Index (HDI), India ranked one hundredth. Over the subsequent decades, India's economy expanded by 650%, while the global economy by less than 200%, and as a result India climbed in the HDI rankings. It now stands at 89th among the original 124 countries, up 11 spots.
Between 1989 and 2010 India generated about 10 million new jobs in manufacturing, but according to the World Bank economist Ejaz Ghani, nearly all the jobs were created in enterprises that are small and informal. Informal shops, many of them one-man operations, now account for 39% of India's manufacturing workforce, up from 19% in 1989.
Crony Capitalism:
In 2010 billionaire list, the top 10 Indian tycoons controlled wealth equal to 12% of India's GDP. Between 2010 to 2015 India saw one of the world's sharpest gains in the clout of good billionaires. India's 2015 billionaire list is filled with new faces, and most of them are in productive industries like pharmaceuticals, education, and consumer goods.
India has a bewildering array of publications, most too small to be economically viable. Of more than 13,000 dailies and 86,000 magazines, fewer than 40 have more than 100,000 readers. They set the tone of a business culture in which it is seen as quite routine to own a newspaper for the purpose of peddling influence.
Consumerism
The state monopolies like MTNL and BSNL have been allowed to slowly wither in the face of more nimble private telecom companies, and together they now account for less than 30 million of India's 900 million telecom subscribers. For the government to protect these state behemoths is hard, given the consumer demand for better services.
After completing this book, i felt if India reduces the protectionist measures and becomes more open economy it looks more promising. As per the book, The most closed economies, with trade less than 50% of GDP, fall into 2 groups. One is a cluster of very populous countries like China, India and Indonesia that rely less on trade simply because their domestic markets are so large. The other group includes oil and commodity driven economies. The more closed they remain, the smaller their share of newly limited global trade flows.
The number of agreements cut by India went from 0 to 18, including agreements with major economies all over the world.
Author concludes it very aptly - India's prospects are holding steady and it continues with its long tradition of confounding both optimists and pessimists.
