India’s Economy Hits the Wall

We have a government in New Delhi with the best brains, the dream team — Oxford-educated Prime Minister Manmohan Singh and Harvard-educated Finance Minister P. Chidambaram. If they don’t deliver, then what?

Just six months ago, India was looking good. Nothing, it seemed, could stop the forward march of this Asian nation.

But stop it has. In the past month, India has joined the list of the wounded. The country is reeling from 11.4% inflation, large government deficits, and rising interest rates. Foreign investment is fleeing, the rupee is falling, and the stock market is down over 40% from the year’s highs.

Growth is slipping, stocks are down 40%, and foreign stock market investors are fleeing. Businessmen blame the ruling coalition for failing to make reforms.

The big hope for a return to the course of reform in India, businessmen hope, will be a new government in New Delhi next year.

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