India: An Economic Superpower in the making?

In the midst of its over all poverty India enjoys rapid economic growth rates and is now the fourth largest economy in the world. A movement within the political climate to free up the entreprenurial spirit in its people and India will well challenge China as a rising econimic super-power.

China is far from free yet when they unleashed some far reaching market based reforms they started an exonomic boom. There is still much to do in essence of creating free-markets, yet the progress to date has shown pedigious growth rates.

India possesses several advantages in the coming surge of super power economies. Firstly they have the world's second largest population after that of China and will most likely over take China in the not to distance future due to China's one child policy. For those who have followed the economic driven growth of demographic designed economic principles (the baby boomers cycle) (See the work of Harry S. Dent for more info) then you clearly can understand the huge growth catalysts that exist in these world leading populations.

The second major factor that favors India is Democracy. While politics have a history of chaos in India, the simple issue is the people can toss out the rulers. A nice bit of social positive force in this major advantage.

Two decades ago the current prime minister, Manmohan Singh, presided over an economic U-turn as finance minister. Observed Indian journalist Niranjan Rajadhyaksha: "The dramatic liberalization of that year and further policy changes by governments in the late 1990s were a smashing success in some ways — India has a far more stable economy and is far more prosperous than before." "Average dollar incomes have more than tripled since 1991. Diets have improved and more proteins are being consumed. School enrollment has soared. Human development indicators increased more in the first decade of the current century than they did in the 1990s."

While there are still growing pains with issues such as the legal system regulatory processes and the business rules, and labor laws,  there is enough movement towards improvements to be optimistic over the future.

 Last week Finance Minister Pranab Mukherjee announced that foreign investors will soon be allowed to purchase stock mutual funds managed by Indian companies, but Wall Street managers warn that the details will determine the plan's success. While foreign investment did drop last year due to a perception of a decrease in the continued liberalization of policies, economic growth is still projected to hit 8.5-9% this year while China has pulled back its projection to 7%. If New Delhi systematically reformed its policies, India could consistently outgrow and eventually overtake China.

Later this week we will look at some ways in which there is positive movement towards the changes that can move India into the realization of becoming an econimic super power.