Feature

Why we should worry about India

India’s economy is slowing down, and the consequences will make the euro zone’s problems “a pittance by comparison.”

Tyler CowenThe New York Times

India’s economy is slowing down, and the consequences will make the euro zone’s problems “a pittance by comparison,” said Tyler Cowen. The country’s projected growth rate for this year has declined from more than 8 percent to 6.9 percent—still impressive by most standards, but a worrisome loss of momentum for an economy expected to be the world’s largest by next century. Particularly disturbing is that declining growth could leave millions of Indians trapped in extreme poverty for another generation. Some causes of the slowdown can be addressed: poor energy infrastructure, ossified markets, and hostility toward foreign businesses. “More troubling are the causes that have no easy fix.” India’s agricultural sector, which employs half the country’s workforce, remains stubbornly low-tech, with few productivity gains. The country has “one of the world’s most unwieldy legal systems.” And modern businesses like the call-center industry wall themselves off, suggesting that “success is achieved by separating oneself from the broader Indian economy, not by integrating with it.” China and Europe may grab today’s headlines. But “we ignore India’s troubling trends at our peril.”

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