The Wilson Quarterly: India’s Feckless Elite by Sadanand Dhume:
Two years later, India’s rise looks a lot less certain. Economic growth slowed to an annual rate of 5.5 percent in the first quarter of the current fiscal year, and few independent analysts expected it to top six percent in the rest of the year. For a country still at an early stage of development—in dollar terms, the average Indian earns about as much as the average Chinese did in 2004—this augurs ill. Most economists believe that India needs to grow by more than seven percent annually merely to keep pace with the 13 million new entrants into the job market each year. (China’s growth rate, even after declining from its former torrid pace, is eight percent.) Pratap Bhanu Mehta, president of the Centre for Policy Research, in New Delhi, says India is “flirting with social catastrophe.”
Flagging growth isn’t the only cause for concern. Foreign direct investment plummeted 67 percent in the first quarter of the current fiscal year, to $4.4 billion. The rupee has spent much of 2012 touching historic new lows. (By mid-September, it had lost 20 percent against the dollar over the past 12 months.) Though arguably a one-off event, the massive power outage in July that left 600 million people without electricity dramatized the parlous state of Indian infrastructure to the world. The blackout was a powerful follow-up to a stark warning from ratings agency Standard and Poor’s the previous month—that India risked becoming the first “fallen angel” among the BRIC economies (Brazil, Russia, India, and China).