Kaushik Basu, the World Bank’s Chief Economist, is only into the first week of his new job as he attends the Annual Meetings of the Bank and the IMF in Tokyo this week.
In his previous job, Basu was the Chief Economic Adviser to the Indian government. He was asked: “Everyone is talking about China, everything in the world is made in China, but India is nowhere in the picture. Why?”
Basu replied: “India is a cantankerous democracy where policy changes take agonizingly long. There is a lag compared to China, but India is coming up from behind.” It is relatively easier in China to make course corrections, he said, but India has shown in the past week that it can act when push comes to shove.
Several legislations that had been shelved because of politics were pushed through last week, including ones involving foreign investment in the retail trade, pricing policy on diesel and eliminating the fiscal cost of populist subsidies.
Ok, but isn’t that too little too late to catch up with China?