ABSTRACT
India has been acclaimed in recent years as an information technology (IT) superpower and perhaps even as a major new player in the world economy. The Indian economy has been growing at around 5 or 6 percent per annum since 2003,adjusted for population growth,and there are good reasons to suppose that similar rates of growth of gross domestic product (GDP) per capita might be sustainable over the next 20 years. Savings rates are very high in India. Indeed, at just over 30 percent of GDP, gross domestic savings are approaching East Asian levels.The economy sits well inside its total factor productivity frontier, in large part because of low levels of human capital formation, and the country now has the chance to reap a demographic dividend. The ratio of dependants to workers is set to decline from just over 0.6 in 2000 to just under 0.5 in 2025.1
The launch in January 2008 of the Tata Nano seemed like icing on this cake of economic success.Much was made in the west about a car selling for $2,500,but in India the marketing of a car for Rs 1 lakh (100,000) spoke to the existence of a mass middle class. It also signaled the rise of a small group of Indian capitalists and entrepreneurs who could bestride the global stage. Four-lane highways packed with Nanos
offered a vision of India far removed from one of pot-holed roads shared by bullock carts, scooters,and state-built Ambassador cars.In the words of Gurcharan Das, India had been unbound.2 It had escaped from a Kafkaesque world of bureaucratic red tape to take its place in the global information age.
