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India's democracy is the next big threat to Australia's commodities-driven prosperity; India is travelling somewhere between 15 and 20 years behind China
Topic Started: 21 May 2012, 05:54 PM (744 Views)
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Australia's next big problem: India's democracy

May 21, 2012 - 1:10PM

Here's a nasty thought: the big threat to Australia's commodities-underwritten prosperity extending out to 2030 and beyond is India's democracy. Much worse though is the threat that irresponsible democracy poses to India itself.

Present crises aside, Australia is supposed to live happily ever after thanks to India picking up the commodities demand slack as the Chinese economy matures, thus extending our resources boom for another decade or two, giving us yet more time, money and opportunity to restructure into a smart country by investing much more heavily in education.

But as we saw in speeches by BHP's chairman and CEO last week, the world's biggest miner is no longer buying that story.

The Goldilocks scenario was based on the assumption that India would follow much the same path of industrialisation and urbanisation as China is and the likes of Japan, Taiwan and Korea did. They, in turn, travelled much the same road as the US and Europe had a century or two ago, experiencing massive restructuring, productivity growth and wealth creation as their societies were transformed by the growth of cities and moving up the value chain from being primarily agrarian.

There's one big difference though – India is a democracy. It is arguable that no country has undergone such a revolution as a genuine democracy. The leap involved in a populous nation industrialising tends to involve plenty of hard and nasty stuff as the status quo is overturned – land being cleared of peasants, established rent seekers replaced by a new order, societies uprooted and overturned.

The established Asian economic powers weren't democracies when they passed through that stage and China definitely isn't now. Universal suffrage remains a relatively recent phenomenon, post-dating the European and American industrial revolutions. The US might have come closest to it, but only a minority of Americans had the vote (women and blacks were excluded just for starters) as it absorbed “your tired, your poor” and created wealth in various dark mills.

To state the obvious, India is different. By most reckonings of the standard development curve, India is travelling somewhere between 15 and 20 years behind China. Of particular interest to Australia, its steel intensity has barely started to take off. If India was to follow the Chinese example, the economic benefits would be massive, lifting hundreds of millions of people out of extreme poverty. It's been expressed in various ways, but Deng Xiaoping arguably did more to alleviate poverty than all the world's NGOs, charities and United Nations agencies combined.

Read more: http://www.smh.com.au/business/australias-next-big-problem-indias-democracy-20120521-1z08u.html#ixzz1vU738I9k
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nipa hut
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One of the most aggressively stupid MSM articles in recent memory.

According to Pascoe's previous blatherings, BHP's caution about its investment plans is all about some projected future failure of India to follow along China's past demand curve for steel. Never mentioned in the article is that this is Pascoe's premise, not BHP's (you'll struggle to find much mention of India at all in the recent speeches by Kloppers and Nasser...). And, Pascoe advances this theory without a single figure describing or predicting India's steel demand, past, present, or future.

In the current article, Pascoe "refines" the premise, going from unsubstantiated handwaving to ... more unsubstantiated handwaving. Now the "big threat to Australia's commodities-underwritten prosperity" is "irresponsible democracy" in India. Again, not a single figure about actual Indian steel (or coal) consumption, past, present, or future, graces the argument. And naturally, you'll look in vain for any substantiation by Pascoe of actual correlation between Indian political events and India's demand for Australian resource exports, or India's growing levels of investment in Australia resource development and infrastructure.

That might spoil the simplistic handwaving. :lol :lol :lol

Edited by nipa hut, 21 May 2012, 07:44 PM.
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'Black money' burning a hole in India's finances

Ben Doherty New Delhi
May 25, 2012

WITH the value of the rupee plummeting, India is trying to shore up its finances, with the government outlining a plan to tackle the country's rampant ''black money'' problem.

An ill-defined but massive amount of Indian money and "illicit external assets" - believed to run into the tens of billions of dollars - is currently stashed in foreign accounts, the government believes, most of it routed through Singapore and Mauritius to secret European accounts.

The government's white paper on black money alleges much of the money hidden overseas is ill-gotten, through drug trafficking or other crime, and money that is legitimately earned but sent overseas to avoid tax.

A report by India's ministry of finance cites a Swiss National Bank statement at the end of 2010, which said that Indians held about $US1.65 billion in Swiss accounts alone, while other reports suggest Indians hold more money there than any other nationality.

An IMF study estimated the flight of capital from India at about $US88 billion between 1971 and 1997.

Beyond that, the government concedes, it has little idea of how much black money has left India and where it has gone.

Read more: http://www.smh.com.au/business/black-money-burning-a-hole-in-indias-finances-20120524-1z7xk.html#ixzz1vqB5IAC0
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