The fool’s declaration

I am not a reactionist person generally, but the title page of the economist ‘the great declaration’ compels me to do so, it say that the great declaration means that emerging economies including India days of turbo charged growth rates are over and they will be no more in position to incash weakness of rich economies, they will no longer be able to catch up with the rich economies as fast as they did in 2000s.

First, the basics, which says that the growth rates cannot be kept ever rising and they are always prone to cyclic fluctuations, what India added in 2008 to its total output  is roughly equal to what it had added in 2012 in absolute terms, because in 2007 base was low while it was higher in 2011. The important thing is the fundamentals of the economy which comprises investments, savings, institutions, inflation etc. Compare to 2000s there is hardly any decline, and even if they are, it’s just marginal decline which primarily reflects the global conditions.

Second, BRIC countries grew not because rich were troubled, but because they embarked the path of conscious economy building, generating surpluses, reviving industries, instilling reforms, while rich countries did the opposite, so even if rich countries have realised their mistakes and started painful corrections it is no way going to block the growths of these countries because they already have huge pent up demand in form of underserved domestic consumer base.

Third, BRIC have undergone structural reforms in shadow of boom period by freeing sectors from government control, cutting administered prices etc, so the current slowdown is mainly because of the afterglow of these attempts and global slump conditions.

The only declaration that can be made about them is that they may not have the happy time in form of problem of riches in near future , but their inner capability and strength remains unchallenged.