India’s economic difficulties have dominated MSM headlines over the past couple of weeks, along with tragedies like a submarine explosion that likely killed more than a dozen navy men and the worst fighting along the border with Pakistan in decades. The New York Times calls it India’s “summer of difficulties.”
“India is now the sick man of Asia. They are in a crisis.” said one economist. “I think things will get much worse before they get better,” said another. “The government is between a rock and a hard place.” The Sensex, India’s stock index, fell precipitously last week. The rupee hit another record low today.
It wasn’t so long ago that many were writing about how India was destined to rival China as a global power. Various American officials, including President Obama, have endorsed India’s bid to become a permanent member of the UN Security Council. Has this “summer of difficulties” cast all this into doubt?
Probably not. Just as a summer of good news does not mean an economy will be soaring forever, a period of bad news does not mean it will always be flailing. As the chief economist of the World Bank said in a press conference yesterday, ”Growth may not have bottomed out. We have further to go (down), but the situation is not as bad as is being captured by the mood and captured in the headlines. India is nowhere near the 1991 crisis. The gloom is being overplayed.”
As a general rule, the MSM and the Davoisie overreact to trends. America was supposed to be invincible in the 1990s, and after 2008 the consensus voices pronounced that we had entered a terminal decline. Similarly the BRICs were unstoppable and taking over the world a couple of years ago; now they are supposedly roadkill on the economic highway.
India clearly faces a time of economic and political testing, and some difficult reforms lie ahead. But never in its history has India had such an abundance of savvy entrepreneurs and well educated young people. It is much harder to build a superpower and a dynamic 21st-century economy than all those people predicting the imminent triumph of the BRICs back in 2010 and 2011 thought, but India is a much stronger and more resilient country than the pessimists of today understand. India and China both face huge challenges as they continue to develop; both countries are caught up in the rapids of history and may well have some mishaps and spills. But just as the optimists should never forget the complex and daunting obstacles these giant societies must overcome, the pessimists should never underestimate the talent, energy and sheer drive to succeed that animates so many people in these countries and gives them such enormous reserves of ingenuity and strength.
[Manmohan Singh photo courtesy of Shutterstock]