Posts filed under ‘India’

A history of India

An interesting article in the New Statesmen, looks at the history in India and explores reasons why India has defied predictions made a hundred years back regarding the progress – or rather lack thereof – of the country economically and especially democratically.

Sir John Strachey, a high official of the British Raj during the nineteenth century, once publicly stated that there would never be an “India” in the sense of a nation state with a unified system of government rule, due to the great number of languages spoken and religious beliefs that existed in the country.

As is quite visible today, India has proved a lot of skeptics wrong. But how did they manage to integrate successfully a Democratic system of governance and create a national identity when there existed – and still exist – such a diversified number of races, religions and languages spoken.

The answers lie, according to the writer, in many things that as economists, we may not have previously taken into account: Cricket and the local film industry.

The writer tends more on the sociological side, arguing that the Hindi Film Industry, popularly known as Bollywood, and Cricket, “an Indian sport accidentally invented by the West” (described by the sociologist Ashis Nandy), could have played as much a part in creating a solidarity among people as did the British legacy of the English language which allows goods and people to move about somewhat peacefully across India.

If it can be rightly proved that Bollywood or Cricket did inadvertently play a role in the creating a solidarity among people, then one can only wonder how many other ‘accidents’ and random events in history – good or bad – could be playing a significant role in explaining various phenomena experienced in the world today – which otherwise would have been given an economic, or rather a more ‘rational’ explanation.

After all, who would’ve thought that the legalizing of abortion in the US in the late ’80s could possibly have been the main explanatory factor in the significant drop in crime rates another 20 years later?

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August 6, 2007 at 5:40 am 1 comment

India’s Expensive Rupee

While the Sri Lankan rupee continues a downward spiral, losing value against other currencies, India’exchange rate currently stands at Rs 40: US $ 1, and doesn’t show any sign of losing steam.


This outcome is an obvious sign of the attractiveness of the Indian economy – the high demand for the Indian rupee sparked mainly by the large influx of foreign funds. But the picture isn’t all that rosy to everyone, having negative repercussions on one of the drivers of economic growth – exports.

According to an article published by the Economist, exporters in India have expressed their concern over the rising rupee, arguing it has reduced foreign demand for their products. Rakesh Mohan, Republic Bank of India’s Deputy Governor, recently suggested that India were experiencing symptoms of the Dutch disease.

In the apparel sector – one of India’s major export industries – the strong currency has eaten into the value of exports to the US, which declined by 3.5% year on year in January-April 2007.

The Republic Bank of India have responded by making it more difficult for Indian firms to borrow in foreign currency and eliminating the exemption from ECB limits. While one wonders the extent to which this measure can counteract the effect of massive inflows of foreign currency into the country, it definitely is a start.

July 27, 2007 at 4:36 am 1 comment


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