India’s Growth: Hunting Mushrooms Versus Picking Winners News Feed

Location: India


India has one of the world’s fastest growing economies. But why? Many believe that the economic liberalization and reforms of the early 1990s rocketed India into the orbit of 7 to 8 percent growth rate from the infamous “Hindu growth rate” of 3 to 4 percent. In the 15th anniversary issue of Business Today, India’s leading business magazine, Nathan’s economists argue otherwise.
 
According to Robert Damuth and Ram Tamara, the current boom is fueled by the success of India’s IT industry. And that success arises from the advent of the digital era, the consequent global demand for IT services, and the abundant supply of high-skill low-cost human capital in India—not any government policy to engineer the growth in the industry.
 
Damuth and Tamara liken the tremendous growth of India’s IT industry to mushrooms that sprout randomly and almost overnight. Picking which industry or industries will sprout next and sustain economic growth is as difficult as predicting when and where the next mushroom will sprout. Still, they cautiously identify skill-based manufacturing and retail, especially agro-based retail, as sectors likely to sprout if obstacles, primarily in infrastructure, can be removed to allow businesses to realize cost reductions.
 
 Hunting for Mushrooms in India (PDF)

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