1. Derek Scissors

September 4, 2018 | American Enterprise Institute

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India chooses economic mediocrity

Foreign and Defense Policy, India/Afghanistan/Pakistan

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Key Points

• Disputes between Prime Minister Narendra Modi’s government and the opposition obscure the crucial fact that India has pursued the same unwise economic policies regardless of who has been in office. The result is decent economic performance while the possibility of a true breakthrough slips away.
• India has consistently emphasized GDP growth while not even measuring employment properly, much less pursuing maximum employment through a liberalized labor market. It is therefore impossible for the country to make full use of its huge labor force.
• Most rural land is collectively owned. The result, according to both history and basic economics, is that hundreds of millions of rural citizens remain poor, unproductive, and isolated from modernization.
• Large sums of money are wasted despite claims of progress that should offer opportunities for high-return investment. This is seen in long-term borrowing by central and local governments and the creation over time of nonperforming assets in public-sector banks.

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