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Posts Tagged ‘India’

The Approaching Debt Wave

Posted by hkarner - 1. Februar 2020

Kaushik Basu, former Chief Economist of the World Bank and former Chief Economic Adviser to the Government of India, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

The World Bank has warned that a massive debt wave is building worldwide. There is no telling who will be hit the hardest, but if vulnerable countries, from the United Kingdom to India, do not act soon, they may face severe economic damage.

NEW YORK – Over the last decade, the world economy has experienced a steady build-up of debt, now amounting to 230% of global GDP. The last three waves of debt caused massive downturns in economies across the world. 

The first of these happened in the early 1980s. After a decade of low borrowing costs, which enabled governments to expand their balance sheets considerably, interest rates began to rise, making debt-service increasingly unsustainable. Mexico fell first, informing the United States government and the International Monetary Fund in 1982 that it could no longer repay. This had a domino effect, with 16 Latin American countries and 11 least-developed countries outside the region ultimately rescheduling their debts.In the 1990s, interest rates were again low, and global debt surged once more. The crash came in 1997, when fast-growing but financially vulnerable East Asian economies – including Indonesia, Malaysia, South Korea, and Thailand – experienced sharp growth slowdowns and plummeting exchange rates. Den Rest des Beitrags lesen »

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The risks from India’s rotten banks

Posted by hkarner - 12. Oktober 2019

Date: 10-10-2019
Source: The Economist

A slow-motion financial crisis threatens the country’s economic future

Imagine a central bank tweeting that, yes, there are rumours of “certain” banks facing deposit runs but “there is no need to panic”. Would you feel reassured? That is the unenviable position Indians found themselves in last week as a financial storm rumbled on in the world’s fifth-biggest economy with no sign of the authorities getting a firm grip. In the latest fiasco a co-operative bank, pmc, is accused of fraud, prompting depositors to yank their cash out. Meanwhile shares in Yes Bank, a private lender, have collapsed by 40% in the past month as rumours swirl. These are not isolated incidents. Roughly a third of the financial system is on crutches or under suspicion. Dazed by the scale of the task, the government and the Reserve Bank of India (rbi) are dithering. Until they act, India’s economy will not perk up—and there is a danger of a full-blown crisis.

The origins of this mess go back to 2005. In the first phase conventional banks, which control about four-fifths of the system’s assets and are mostly state-run, lent too freely to infrastructure and industrial projects, sometimes ones backed by well-connected tycoons. The plight today is a continuation of the second phase: a boom-and-bust in lightly regulated shadow banks, which control the remaining fifth of the system. The danger grew in 2016 when the government temporarily abolished large banknotes, leading many people to deposit money in banks and mutual funds. These, in turn, used the windfall to make loans to shadow banks, which went on their own lending binge, often using the money to finance property projects. Den Rest des Beitrags lesen »

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Trump and Modi are the mainstream faces of the global far-right

Posted by hkarner - 24. September 2019

Date: 23-09-2019
Source: The Guardian by Cas Mudde

The US and India are two of the most populous and powerful democracies in the world. And they are both represented by far-right leaders

‘On his travels all around the world, Modi is rarely confronted with protesters and few journalists will describe him as far right.’

Even by the standards of the Trump era, the “Howdy Modi!” meeting in Houston, Texas, this Sunday was weird. The Indian prime minister, Narendra Modi, had invited Donald Trump to be his guest at a massive rally in the American heartland. And, unsurprisingly, giving his submissive behavior towards authoritarian leaders, the president had accepted, happily playing second fiddle to a foreign leader on US soil. Den Rest des Beitrags lesen »

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India Struggles to Employ an Exploding Population

Posted by hkarner - 24. April 2019

Date: 22-04-2019
Source: The Wall Street Journal
Subject: ‘The Youth Bulge’: India Struggles to Employ an Exploding Population

As Indians elect a government, the country’s economy faces a challenge that could define its global success in the years ahead

Prime Minister Narendra Modi and his ruling Bharatiya Janata Party were featured in this recent campaign advertisement in Beed, Maharashtra, India.

SAHARANPUR, India—Amid the cacophony of India’s general election, now in
full swing as up to 900 million people vote over five weeks, one note rings through: the shortage of jobs for the country’s exploding youth population.

The high hopes Prime Minister Narendra Modi sparked in the 2014 election when he promised “achhe din,” or good times, are now colliding with economic distress in rural areas. Around this northern Indian city and in similar regions across the country, legions of young Indians struggle to survive in the informal economy while unable to find regular jobs in the cities either.

Agriculture provides nearly half India’s employment, even though those workers earn less than 20% of the national income. That imbalance hasn’t changed much in the past five years under Mr. Modi’s Bharatiya Janata Party-led government, which is running for reelection. India hasn’t created the sorts of entry-level manufacturing jobs for rural workers, either, as happened in China and other Asian countries that successfully established export industries. Den Rest des Beitrags lesen »

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Indian technology talent is flocking to Canada

Posted by hkarner - 22. Dezember 2018

Date: 18-12-2018
Source: The Economist

As immigrant techies shun the US, its neighbour has rolled out the red carpet

What would induce a software developer to quit a good job in Silicon Valley and trade California’s sunshine for Toronto’s wintry skies? For Vikram Rangnekar, born in India and educated in America, the triggers were the restrictions placed on immigrant tech workers holding an h-1b visa (starting companies or taking long holidays is discouraged) and what looked like a 20-year wait to get the green card he needed in order to settle down. Rising anti-immigrant sentiment under President Donald Trump’s administration did not help. Two years later he thinks he made the right choice. “I didn’t want to spend the best years of my life on a restrictive visa.”

People like Mr Rangnekar are part of an exodus of tech workers from Silicon Valley. Pushed out by the cost of living as well as by a less welcoming American government, they are being pulled in by countries such as Canada, where tech vacancies are forecast to reach 200,000 by 2020. Canada is gambling that by the time America wakes up to the cost of discouraging immigrants its tech sector will have secured some of the best talent. Den Rest des Beitrags lesen »

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The missing 235m: Why India needs women to work

Posted by hkarner - 7. Juli 2018

Date: 05-07-2018
Source: The Economist

Were India to rebalance its workforce, the world’s biggest democracy would be 27% richer

LAKSHMI, the goddess of wealth and fortune, is the closest thing Hinduism has to an economic deity. How poorly her earthly sisters in present-day India are faring. There, women are less likely to work than they are in any country in the G20, except for Saudi Arabia. They contribute one-sixth of economic output, among the lowest shares in the world and half the global average. The unrealised contribution of women is one reason India remains so poor.

Yet far from joining the labour force, women have been falling away at an alarming pace. The female employment rate in India, counting both the formal and informal economy, has tumbled from an already-low 35% in 2005 to just 26% now. In that time the economy has more than doubled in size and the number of working-age women has grown by a quarter, to 470m. Yet nearly 10m fewer women are in jobs. A rise in female employment rates to the male level would provide India with an extra 235m workers, more than the EU has of either gender, and more than enough to fill all the factories in the rest of Asia. Den Rest des Beitrags lesen »

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Chugging along: India’s economy is back on track. Can it pick up speed?

Posted by hkarner - 30. März 2018

Date: 28-03-2018
Source: The Economist

Narendra Modi needs to pass further reforms if India is to fulfil its potential

IT IS easy to be awed by the Indian railway network. The 23m passengers it carries daily travel, in total, over ten times the distance to the sun and back. It is just as easy to find it unimpressive. Delays are frequent and trains antiquated. It takes 14 hours to get from India’s capital, Delhi, to its commercial hub, Mumbai. The equivalent trip in China—from Beijing to Shanghai, a similar distance—takes just over four hours.

Similarly, India’s economy can be seen in two lights. Its long-term growth rate of 7% a year has proved far more dependable than the rail timetable. GDP has doubled twice in the past two decades. Yet deep poverty still lingers and jobs are scarce. And Indian growth has been left in the dust by the Chinese express (see chart). Den Rest des Beitrags lesen »

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In Defense of Democracy

Posted by hkarner - 31. Januar 2018

Chris Patten, the last British governor of Hong Kong and a former EU commissioner for external affairs, is Chancellor of the University of Oxford.

Democracies have had a bad few years, but that is no reason to tout the virtues of dictatorships and authoritarianism. History shows that, when it comes to prosperity and human wellbeing, societies that defend economic and political freedom come out on top.

SYDNEY – Imagine that you, like me, are a typical product of Western liberal democracy, and are invited to give a lecture to a group of Chinese students in Beijing or Shanghai on its benefits. Ignoring the fact that, in reality, the Chinese government would never allow such a lecture, ask yourself: What would you say?

First and foremost, it would be advisable to acknowledge that you do not speak from a position of moral superiority. Western civilization in the first half of the twentieth century was not very civilized. Human rights were trampled. Class war destroyed entire political systems. There were large-scale violent conflicts and much ethnic cleansing. Given this history, Westerners are in no position to lecture on civil liberties or humane values.

It is also worth noting that the global march toward democracy, which seemed nearly inexorable after the fall of the Berlin Wall, now seems to be reversing. According to Stanford University’s Larry Diamond, several countries that were democracies at the beginning of this century have since shifted to different systems. Den Rest des Beitrags lesen »

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India’s Urban Awakening

Posted by hkarner - 20. Januar 2018

Ejaz Ghani

Ejaz Ghani is Lead Economist at The World Bank.

Urbanization advances economic development, but it also poses major challenges, from managing congestion and pollution to ensuring that growth is inclusive and equitable. India has the tools it needs to overcome these challenges, and can do so if its leaders must use them wisely.

WASHINGTON, DC – When the United Kingdom became the first country in the world to undergo large-scale urbanization in the nineteenth and early twentieth centuries, the process transformed its economy and society. Today, India is facing a similar transformation, only it is happening at 100 time the pace. By 2030, India’s urban population will reach 600 million people, twice the size of America’s.

For India, rapid urbanization is particularly vital to enable the country to take full advantage of the demographic dividend afforded by its young population. With 12 million more people joining the country’s labor force every year, the potential of that dividend is huge. As the urbanization process continues, connectivity, proximity, and diversity will accelerate knowledge diffusion, spark further innovation, and enhance productivity and employment growth. Den Rest des Beitrags lesen »

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India has a hole where its middle class should be

Posted by hkarner - 13. Januar 2018

Date: 11-01-2018
Source: The Economist

That should worry both government and companies

AFTER China, where next? Over the past two decades, the world’s most populous country has become the market qua non of just about every global company seeking growth. As its economy slows, businesses are looking for the next set of consumers to keep the tills ringing.

To many, India feels like the heir apparent. Its population will soon overtake its Asian rival’s. It occasionally grows at the kind of pace that propelled China to the status of economic superpower. And its middle class is thought by many to be in the early stages of the journey to prosperity that created hundreds of millions of Chinese consumers. Exuberant management consultants speak of a 300m-400m horde of potential frapuccino-sippers, Fiesta-drivers and globe-trotters. Rare is the chief executive who, upon visiting India, does not proclaim it as central to his or her plans. Some of that may be a diplomatic dose of flattery; much of it, from firms such as IKEA, SoftBank, Amazon and Starbucks, is sincerely meant. Den Rest des Beitrags lesen »

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