World Bank data suggest that India was ninth in the world in terms of new businesses registered in 2011. The cost of starting up a business is still high but it has steadily fallen from 70.1 percent of per capita gross national income in 2008 to 49.8 percent in 2012. The time taken to start a business in India has fallen from 33 days four years ago to 27 days in 2012. Newly released Planning Commission numbers show that India reduced extreme poverty by 15.3 percent in seven years; that is, 138 million people were lifted out of absolute misery between 2004-05 and 2011-12. In the same period, millions of Indians moved up the social ladder to be counted as middle class. Sales of luxury cars, designer clothes and high-tech gadgets have been growing at 15-20 percent. A Bain & Company report on luxury has been quoted as estimating the number of people with disposable incomes of over $100,000 to top 132,000 in 2013, up 60 percent since 2006.
So, is it time to bring out the bubbly? Not quite. In a competitive world, you gain only when you outpace your rivals, and not merely by doing better than before. Despite all the improvements mentioned above, India ranks a lowly 132 in the World Bank’s list of countries for ‘Ease of Doing Business’. Growth has stagnated at a decade’s low of near 5 percent. Reflecting the economic weakness, the rupee is plumbing record lows against the dollar. Industrial growth is barely above zero. Consumption demand continues to slump and investments have ground to a halt while retail prices continue to rise. According to Reserve Bank data, private listed non-finance companies’ sales grew just 4.1 percent in the March quarter. These companies are slowing production and cutting costs. India has the largest number of young people among major economies but does not have the mechanisms in place to train them or find decent jobs for them.
A recent survey by the Centre for the Study of Developing Societies (CSDS) for CNN-IBN shows that the number of people who are satisfied with their personal financial situation has dipped over the past two years. The dissatisfaction was most pronounced among the middle class. About a third of the 19,062 surveyed believed the country’s economic condition was “so-so”. Nearly half of those felt that the gap between rich and poor has widened. India’s Gini coefficient (which measures income distribution) was 33.9 in 2010 compared to 30.8 in 1994, indicating that income inequality has been rising.
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(This story appears in the 23 August, 2013 issue of Forbes India. To visit our Archives, click here.)
Throw out Congress, vote BJP. That will solve most of our economic problems. Social and political freedom will be a lot harder, because we live in an extremely backward, racist, conservative, and religious country. Truth is the Constitution needs a page 1 rewrite, because our founders were.......dimwits. How someone could write that every citizen has free speech and then proceed to restrict speech in the very same sentence is beyond me. But thats what they managed to do. Should have just done what Bollywood does, and copied the Americans\' First Amendment word for word.on Aug 20, 2013
In developed countries, unique policies actually enforce the govenance and take control of the hapeenings. In India, we do not see such control. It may be on paper but in reality, the indivisuals takes the decision and ownership of what they are doing. If Indai creates the system who will implement such control, the system has to be very mature. One reason India recover quickly from 2008 recession; becase, in India , every individual takes the ownership of their own deed. The individual can be a perso, a company, a groud of people.on Aug 19, 2013
The article is balanced and makes it clear that India is at a turning point in its economic history. The steep and constant fall in the value of the rupee against the dollar is a cause for concern. Inflation numbers have come out with a Y-O-Y 113 basis point surge for July which is worrisome. IIP Manufacturing numbers have come in with negative growth 0f -0.20% for July. Couple this with a conservative central bank, the RBI, resorting to progressive monetary tightening to support the rupee and there is a case for systemic and wide-ranging belt tightening. India stands at a precipice and any extravagant subsidies and freebies will NOT bell the cat.on Aug 19, 2013