Musings on Indian Economic Growth
Though, all this is a reason to rejoice and revel in the prosperity that our new economy has bought us, we must for a moment pause and think about whether is it really sustainable? And is it as good as it seems? As I see it, the answer sadly is no. Unfortunately "India shining" applies only to a small section of the Indian social diaspora. Which is mostly dependent on the powerful outsourcing boom. Bluntly put, the new Indian middle class, is fundamentally not dependent on Indian markets for its lively hood.
This is such a skewed situation. With a more than 16% of world population residing in India, Indian markets are huge. Mind bogglingly so, yet they are mostly untapped. Purchasing power for major parts of the society has not improved in spite of the considerable increase in the outsourcing boom (because, mostly they are not correlated). The Indian consumer still is less powerful than an average western consumer that most of the outsourcing boom caters too. Our local markets are weaker and hence does not have enough power to drive capital asset appreciation. The new information economy is dependent on a weak rupee to be profitable. The local market has been neglected by the government at the cost of promoting the "new economy". We haven't made more Indians richer, we have just made a few Indians more richer.
So, what's wrong with that you may ask? Well, sustaining the new economy means keeping the rupee weak, and decreasing the purchasing power for a majority of the Indians. This means, our markets (not the stock market) but local Indian markets are weaker than local western markets and hence keeping a lot of Indians poor. In the worst case it might lead to violent revolutions and sometimes duct-tape solutions which are promoted with revolution like whats happening with the people's war group in many parts of the country. And keeping a majority of Indians poor for the benifit of making a few indians richer is never a good idea.