India's Economic Miracle Loses Its Shine
(Editor's note: Mr. Scissors is a research fellow for economics in the Heritage Foundation's Asian Studies Center.)
India's top officials are increasingly self-congratulatory about the country's growth trajectory. Last month the Finance Ministry issued a report stating that India could overtake China to become the world's fastest growing economy within four years. Minister Pranab Mukherjee foresees double-digit growth 'in the very near future.' But amid all the triumphalism, no one in New Delhi seems to be focusing on just how sustainable -- or not -- that growth will prove.
That's probably because, like the rest of Asia, India experienced rapid expansion for years on the back of the Federal Reserve's easy money policies, which inflated the global economy and saw capital pour into the Asia-Pacific region. The 2002-08 boom in India had little to do with fresh action from New Delhi, which used the upswing to run up notable deficits and spread the wealth around with generous cash payouts to the poor.
But with booms come busts. The Federal Reserve is still running easy money policies, but the U.S. economy is sluggish, as is Europe. Without those engines of growth -- and no discernible economic reforms of its own -- it will be hard for India to repeat the previous decade's performance.
There are already signs of a slowdown. By the government's own tally, real GDP growth slipped to 6.0% for the October to December quarter, versus 6.2% the previous year. The failure to move back toward the pre-financial crisis pace has been dismissed as due to a weak monsoon and other transient factors, with a return to 9% growth portrayed as around the corner. It is at least as likely that 9% growth will prove transient.
New Delhi is struggling to meet its commitments. In its February budget presentation, the Congress Party-led government pledged to cut its deficit to a still hefty 5.5% of GDP. This is supposed to be accomplished on the back of revenue gains from a faster economy. But the government promised the exact same thing last year, and the deficit reached 6.9% of GDP.
Persistent budget deficits cloud the prospects of a generation of rapid growth, as interest burdens rise and the government has to raise taxes or debt to fund it. There is also harm in the here and now: The Reserve Bank has been forced by record government borrowing to maintain exceptionally loose monetary conditions, or risk choking off private credit. This has allowed inflation to move into the 9% range in barely a year. Last week's rate hike by the Reserve Bank is welcome but tightening probably started too late. Monetary authorities have little leeway given the Congress Party's demands for both high growth and cheap deficit financing.
Congress isn't helping by sticking to a program of populist handouts, despite the fiscal constraints. Scheduled tax overhauls have been delayed and diluted, with the government again reduced to cries of 'next year.' Food imports have soared despite hideously expensive fertilizer subsidies.
Congress claims growth will motor ahead on a surge of public infrastructure spending. Technically, that might be true: Government spending on infrastructure automatically adds to current GDP. But the future returns are likely to be dismal. Public infrastructure programs almost always exceed both schedules and budgets, and many are never completed. Further, foreign companies have voted with their feet on commercial value. Wholly-owned foreign infrastructure projects are permitted, and incentives have been offered. But the foreign share of much-touted public-private infrastructure partnerships is negligible.
It was not infrastructure spending that moved India beyond the 'Hindu rate of growth.' The way to achieve durable expansion is to repeat the 1991 big-bank reforms: liberalize, liberalize, liberalize. But for now, the Congress-led government is headed in the wrong direction, and slowly taking the shine off of India's economic miracle.
度 的高級官員對印度的增長軌跡越來越有自吹自擂的勢頭。上個月﹐印度財政部發表的報告稱印度有可能在四年內超越中國成為世界增長最快的經濟體。財政部部長慕 克吉(Pranab Mukherjee)預計印度在不久的將來將實現兩位數的增長。在一片歡呼聲中﹐新德里似乎無人關注這種增長將如何能夠（或不能）持久。
這 可能是因為﹐在美聯儲寬鬆貨幣政策的支持下﹐印度與亞洲其它國家一樣﹐經濟多年來快速增長﹐導致全球經濟膨脹﹐資本大量湧入亞太地區。印度2002年至 08年的繁榮發展與印度政府的新舉措幾乎沒有關係。印度政府利用經濟高速發展階段累積了高額的赤字﹐並通過向窮人進行大量的轉移支付而實現了國富民享。
印 度已經出現了增長放緩的跡象。據印度政府自己的統計﹐去年第四季度的GDP實際增長率下滑至6.0%﹐而前一年是6.2%。未能恢復到金融危機前的增長速 度被歸咎為受季節性因素和其它短時因素影響﹐而恢復到9%的增速被形容為是觸手可及。至少9%的增速將同樣很可能是十分短暫的。
由 於利息負擔不斷增長﹐政府不得不通過增稅或舉債以支付利息﹐居高不下的預算赤字使快速增長的前景暗淡。它帶來的危害也表現在現在：創紀錄的政府負債水平迫 使印度儲備銀行(Reserve Bank)繼續保持異常寬鬆的貨幣政策﹐否則就會有扼殺私人信貸的風險。這使通脹在僅僅一年間便達到了9%的水平。儲備銀行上週加息是個好消息﹐但緊縮措 施可能開始得太晚了。鑒於國大黨即要求高速增長又要求為赤字提供廉價的資金保障﹐印度貨幣當局幾乎沒有可操作的空間。
國 大黨稱﹐隨著公共基礎設施支出的激增﹐印度經濟將繼續高速增長。從技術上講這是行得通的：政府的基礎設施支出會自動增加到當前的GDP中﹐但其未來回報可 能不甚光明。公共基礎設施項目幾乎總是落後於進度並超出預算﹐而且許多項目永遠都完不了工。此外﹐外國公司已經用腳給它們的商業價值投了票。印度允許外資 全資擁有基礎設施項目﹐並提供了激勵措施。但倍受吹捧的公私合營基礎設施項目中的外資份額可以忽略不計。
編者按：希瑟斯(Scissors)是美國傳統基金會亞洲研究中心(Heritage Foundation’s Asian Studies Center)從事經濟學研究的訪問學者。