By Ajay Chhibber As India enters 2020, still unclear on how to stem the economic downward spiral, a somewhat longer perspective may help us understand our predicament and what lies ahead. The slowdown that India has seen, especially over the last seven quarters, qualifies for some as a crisis. However, the political establishment appears ‘shaken, but not yet stirred’ into bolder second-generation reforms. It has recapitalised, merged, but not reformed, its state banks. Corporate tax cuts, even ‘ease of doing business’ are good piecemeal reforms. Necessary, but not sufficient to turn things around quickly. The last time India saw bold comprehensive reforms was in 1991, triggered by a balance of payments (BoP) crisis. Those first-generation reforms eventually paid off across the board. India’s dollar GDP almost quadrupled from about $450 billion in 2000 to $1.67 trillion 2010, but since then has not even doubled to $2.9 trillion in 2019. GDP per capita almost tripled from $439 in 2000 to $1,346 in 2010, but has since only increased to around $2,000 in 2019. Trade and finance played a key part in this phenomenal rise in income in the previous decade. India’s trade to GDP ratio almost doubled from 26.9% in 2000… Read full this story
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