India Insight

When the British were finally expelled from India in 1947, driven out of a country scarred by decades of imperialist rule, they left at least one parting gift: a linguistic legacy that has formed a crucial ingredient in the country’s economic miracle.

English proficiency is hailed as an invaluable foundation in India’s rise to the top of the world’s information technology and knowledge outsourcing industries, fuelling the country’s rapid growth with billions of dollars of business every year and streams of overseas investments into global IT centres such as Bangalore.

But, as Asian rival China surpasses India’s English proficiency rates for the first time, that advantage over other developing economies looks to have been squandered.

China was ranked one place above India in Education First’s 2011 English Proficiency Index, released last month, the first time India has been beaten by its neighbour and fellow BRIC economy in the international rankings of foreign countries English-speaking abilities.

“It appears that China is poised to surpass India in the number of English speakers in the coming years, if it has not already done so,” the report said.

They call economics the dismal science, but Larry Summers, one of its pre-eminent public practitioners, is anything but dull. That penchant for intellectual controversy means he hasn’t always won popularity contests, but he is unfailingly stimulating, as he proved in a speech in India last week, when he hit on one of the biggest issues in the world economy today, and coined a snappy catch-phrase to describe it: the “Mumbai Consensus”.

The Mumbai Consensus, Summers said, is “people-centric.” He contrasted it both with the Washington Consensus, the U.S.-led, free-markets-and-democracy formula that seemed to have conquered the world after 1989, and with the Beijing Consensus, China’s state capitalist approach that today is winning fans in emerging markets and in some developed ones.

Summers thinks the real model to watch is India’s, the world’s largest democracy. Partly because of its political system, India’s economic rise has been powered as much by the voracity of its domestic consumers as it has by the country’s push into foreign markets. That’s a sharp contrast with China, where the focus has been on working for the rest of the world, while the Chinese people, who are poorer on average than those of Albania or Jamaica, nonetheless save more than half of their GDP.

Forced to cancel book-signing events in his own country due to the threat of being pelted by eggs by anti-war protestors, former British Prime Minister Tony Blair took the publicity tour for his newly-released memoirs to India with an interview with the Times of India on Saturday.

In A Journey, which has caused a great deal of interest and controversy in the UK, Blair writes: “India remains , still developing, that manages to be genuinely democratic,” and this sentiment continues in the interview:

“I was very keen to move beyond the old-fashioned relationship… My view was India was going to be one of the key leading powers of the world in the times to come. The west in the 21st century, including countries like mine will have to get used to the fact that we’re going to have partners who will be equals, sometimes more than equals,” he says.

Only last year Indian policymakers were showing off the strong fundamentals of the economy to the world and pressing for a seat at the high table of global fora. Everything was going well — high growth, a surging stockmarket and a lot of attention from global investors attention.

But high oil prices and rising inflation threaten to bring the India growth story to its knees. Finance Minister PalaniappanChidambaram’s speech at a meeting of oil producing and consuming nations in Jeddah on Sunday showed the cracks in India’s confidence levels.

No doubt oil prices have spiralled, threatening the economic gains made by developing countries, as Chidambaram said in his speech.

India’s 80-year-old opposition leader says he needs help on “money matters”.

Not only does his wife pay all the bills at home, but he asked business leaders on Tuesday for help in drawing up a new economic model which does not ape the West.

He also had some strong words for the Congress-led government, accusing it of failing to control inflation and failing to bridge the gap between the rich and the poor.