The ineluctable fact is that what India has achieved under the Congress is an outstanding economic performance

by Guest Fri Apr 04, 2014 12:10 pm

How does all of the above make you feel about India? Ten years of off-the-charts growth, while reducing debt-to-GDP sharply to 67 per cent from a near-bankruptcy level of 85 per cent under the NDA (all with seven per cent wholesale price inflation) and moderate current account deficit and external indebtedness? India has slowed? Well, compared to the precipitous drop every country has seen since 2008, a five per cent growth with near-zero debt risk is top-drawer performance.

It is puerile to expect India to be in macroeconomic nirvana, growing at eight per cent, with little fiscal or current account deficits and moderate inflation when the country is the world's third-largest economy (measured in terms of purchasing power parity), and, hence can't escape unscathed from the ravages of the global crisis. There is a collective cry for India's macroeconomic exceptionalism: that India should adhere to no global trends. And this leads to the under-analysed Panglossian view that we need Modi's nostrum, because he, single-handedly, can turn gale-force headwinds into tailwinds. It is most amusing how fund managers conveniently forget the meaning of "relative performance" and "risk-adjusted growth" when it comes to analysing India.

But, the ineluctable fact is that what India has achieved, particularly under UPA-II, is an outstanding economic performance. Sure, we have problems. But compared to what the rest of the world has, we will take ours any day. There is no absolute measure of greatness. It is always relative. And India's smartness lies in the fact that it saw from 2008 that it was no longer a 500-run wicket but a 200-run one. Almost no other country saw that.

And lastly, one has to shake one's head at the media's superficial (deliberate?) view that we are witnessing a Modi-based market rally.

This is utter nonsense. The world has woken up to the fact that India has arguably had the best growth-risk profile of any major country in the world over 10 years, a negligible CAD, a competitive currency, with no intractable bubbles in the economy (the banks' bad loan problem is still just one per cent of GDP). We challenge N K Singh and Arvind Panagariya to show us any other economy that matches India on this matrix. Hence, our markets are reflecting this relative solidity of India's growth model.

Is it anybody's case that we would still been at highs had we still been running a 4.5 per cent CAD?

http://wap.business-standard.com/article/opinion/shankar-sharma-devina-mehra-the-strange-case-for-india-s-macroeconomic-exceptionalism-114040201255_1.html