ECONOMIC VISION FOR PRECOCIOUS & CLEAVAGED INDIA
• A fundamental truth of geography is that large countries tend to trade less than small countries. Being large makes the benefits of trading with the outside world very low relative to trading within the country. The opposite is true for small countries: lacking an internal market, their benefits of trading with the world are relatively large and hence they tend to have higher trade-to-GDP ratios.
• One can see India’s transformation even more starkly by comparing the evolution of its trade-GDP ratio with that of China over the past three decades. India’s ratio has been rising sharply, particularly over the decade to 2012, when it doubled to 53 per cent; the recovery from the global financial crisis in 2008 was also swift.
• India’s foreign capital flows as a share of GDP reveals that despite significant capital controls, India’s net inflows are, in fact, quite normal compared with other emerging economies.
• Figure shows that India’s FDI has risen sharply over time. In fact, in the most recent year, FDI is running at an annual rate of $75 billion, which is not far short of the amounts that China was receiving at the height of its growth boom in the mid-2000s.
• India has grown at about 4.5 percent per capita for thirty seven years, an impressive achievement.
• The only other countries that have grown as rapidly and been democratic for a comparable proportion of the boom are Italy, Japan, Israel, and Ireland.
• South Korea spent at a per capita GDP level of close to $20,000 what India spends today at a per capita GDP level of $5,000.
• India did not invest sufficiently in human capital for instance, public spending on health was an un unusually low 0.22 per cent of the GDP in 1950-51 (MoHFW, Government of India, 2005). This has risen to a little over 1 per cent today, but well below the world average of 5.99 per cent (World Bank, 2014).
• One can see India’s transformation even more starkly by comparing the evolution of its trade-GDP ratio with that of China over the past three decades. India’s ratio has been rising sharply, particularly over the decade to 2012, when it doubled to 53 per cent; the recovery from the global financial crisis in 2008 was also swift.
• India’s foreign capital flows as a share of GDP reveals that despite significant capital controls, India’s net inflows are, in fact, quite normal compared with other emerging economies.
• Figure shows that India’s FDI has risen sharply over time. In fact, in the most recent year, FDI is running at an annual rate of $75 billion, which is not far short of the amounts that China was receiving at the height of its growth boom in the mid-2000s.
• India has grown at about 4.5 percent per capita for thirty seven years, an impressive achievement.
• The only other countries that have grown as rapidly and been democratic for a comparable proportion of the boom are Italy, Japan, Israel, and Ireland.
• South Korea spent at a per capita GDP level of close to $20,000 what India spends today at a per capita GDP level of $5,000.
• India did not invest sufficiently in human capital for instance, public spending on health was an un unusually low 0.22 per cent of the GDP in 1950-51 (MoHFW, Government of India, 2005). This has risen to a little over 1 per cent today, but well below the world average of 5.99 per cent (World Bank, 2014).
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