Summary
Cloud Over The Glitter
India's on song, but urgent reforms are needed to keep the melody sweet.See the full content of this document
Extract
Business News
Shalini S. Dagar
Fresh from world economic forum at Davos, Uday Kotak, vice Chairman and Managing Director, Kotak Mahindra Bank, is clear that India has made the transition to the big league. He recounts how a decade back, India was not mentioned even in passing; in contrast, it is everywhere now. "India as an asset class has truly arrived," he says.And if there was any doubt about it, then last fortnight, there were a couple of events that dispelled them-from the acquisition of Corus by Tata Steel to the much-delayed upgrade of India's sovereign credit rating by rating agency, Standard & Poor's. In tandem, the Central Statistical Organisation revised its estimates for the growth of the previous financial year (2005-06) to 9 per cent from 8.4 per cent.In the midst of this excitement, came another reiteration in the form of 'Global Economics Paper No: 152' from Goldman Sachs. It is an update on the original BRICs report-the one that started the India fire in the global investing community. The updated BRICs report just adds more fuel and cheer to the India party and says India's contribution to world growth will be even greater (and faster) than implied in the previous BRICs research. (see What the Reports Says).The new BRICs report says: "Productivity growth has been the key driver behind the jump in GDP growth, contributing nearly half of the overall growth since 2003, compared with a contribution of roughly a quarter in the 1980s and 1990s." And improved productivity is coming from the movement of surplus labour from agriculture to industry and services that are at least four times as productive. "Thus far, the economy ...See the full content of this document
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