I'm not sure what it means to be a large economy anymore. If you roam around any of the cities in India, you see nothing but a third world nation, with rampant poverty and horrific infrastructure. And of course in the villages, it's even worse.
And businesses apparently have had difficulty dealing with the corruption in the Indian government.
The country has such a long way to go before it can stand on the same footing as the US or even some of the European countries whose economies it is supposedly surpassing.
Large doesn't necessarily mean a lot for standard of living, because India's population is also very large, so the amount of economy per person is a lot smaller.
India's GDP might make it 4th (by Purchasing Power Parity) or 10th (nominally), but per person it's down at 129th.
I grew up in India. I can confirm whatever you said is true and is a euphemism. Few people talk about the poverty in India (it is almost similar to quite a bit of Africa) and how India was a socialist country where you required license to conduct almost any business. But even fewer people talk about how, culturally speaking, seniority has always been more important than the merits of what is being said and the fact how in practice everything - the law, police services, elections, etc. - falls under the government and aren't independent bodies. The main ruling party for most of history (called Congress) has always been run by one family alone. Nepotism?
E.g.: Facebook did not have to go get approval from the government that they could run Facebook. And since there was no license involved, there was no limit, on say the number of users, etc. Pretty different from pre-liberalization India.
People are voting me down, but I was not making a loaded statement, I'm honestly interested in knowing the difference how it differs from state licensing agencies in the U.S.
For instance, since Facebook is a Delaware corporation, here is the state of Delaware's Business Registration and Licensing:
Its difficult to understand if you haven't lived it. I did,thankfully for a short time before I escaped. So let me try to explain. Facebook had to incorporate so they could pay taxes etc and be "legal". This is a LICENSE to operate. OK.
But lets say some govmint wizard decided that the US economy needed only one social networking company. Back in 2004 that would be myspace. So Mark Z would have applied for a license to become the next social networking company, would have waited 10 years to get it, wouldn't have gotten it, and would've eventually leaped off the Golden gate bridge.
That's what socialism is. What the tea-partiers are calling socialism is nowhere near what real, oppressive, mind-bending, government control is.
There is no more "License Raj" in India. But its still quite crazy, not that different.
India has structural problems in its' economy that will inhibit its' growth going forward. Japan has been stagnating for decades now and has shown no signs that they've figured out what the problem is. They've become the most indebted industrialized nation in the world paying for stimulus after stimulus while at the same time the Keynesians are telling them they haven't done anything to stimulate the economy.
Ohh modern economy... It's fun when Nobel prizes go for those that insist in doing what is clearly not working... And just some weeks ago, a notorious Japanese economist says in a interview they figured out how to deal with the stagnation.... (Permanent stimulus!)... Don't they think the japanese are ever going to retire and need a large chunk of this money borrowed to the government? Without positive demographics it's impossible to keep postponing the balance sheet correction forever...
So even though the country at large is poor, 130 million people could become your potential customers, spending on par with other wealthy nations in the west.
From what I read you're accurate. You could also make the argument that you could replace the word "India" with "China" and not be too far off in describing another huge economy.
This may be true on the outskirts, but in the cities, China has made huge advances, especially with infrastructure, roads, railway, etc.
Of course, this is not true for all of China.
Tell that to all my co-workers in China where I make 3x what they make. They can barely pay for rent. I'm just lucky that as a foreigner, I had leverage to max out the pay scale (and still getting paid only Chinese-level salary). The economic divide between the rich and poor is just as huge and just a big a concern, especially with the crazy real estate prices in the cities. Common to see 7 university-graduated kids sharing a 40 square metre apartment. I have friends like that.
The bottom 5% of households in the US still earn about the same amount as the top 5% of households in China. If we were talking about the top 1% it would be totally different, but still China is overall much poorer than the US - even in the cities.
EDIT: Also contrast it with Brazil, where the bottom 5% make about the same as the bottom 5% of China, while the top 5% make almost what the top 5% in the US make.
In absolute amounts sure, but that's irrelevant to spending power or quality of life.
The bottom 5% of households in the US make nominally more than the top 5% of households in China, but I'm willing to be the bottom 5% in the US lives far worse than the top 5% in China.
Scratch this image deep enough and you will realize top local officials in China are always under tremendous pressure to increase GDP growth to further their own position and careers and that the easiest way will be build 'anything'/'something' within their jurisdiction.
If anything, go ahead and Google for China's empty cities. Frankly, I would not want to be anywhere near that bubble when it bursts. The only point of consolation is that the Chinese still have a tight control over all aspects of their society, so they might be in a better shape to recover when their banks go bust.
There are huge differences between the two. China has far, far better infrastructure for starters, and the amount of absolute poverty is far lower in China.
I agree. The term 'large economy,' when applied to the average person is an irrelevant term. For the average billionaire it means something, but to the average person (in our case, the average internet/mobile user) it means nothing. These old economic indicators do not measure the actual economic conditions in localities. Local economies have to be robust - that's the true sign of a progress.
The problem is in the distribution of wealth. The nation is growing at 7-8% a year compared to 0-2% growth in US, but most of the wealth in India is in the hands of 5% of the population. The middle class is slowly growing, but not at the rate to close the disparity.
Democracy in its core is the reason for the slow infrastructure, government and social reforms because its like moving a big elephant. China on the other hand is able to be quite nimble with communism. Its interesting. I dont advocate communism because it sounds great in theory but rarely works practically, but it is working for China.
Moreover, I remember listening to one of The Economist podcasts where someone had done audited Chinese firms more strictly where they don't write off the cheap (free) land government provides, or other give aways. Turns out on a whole Chinese firms are destroyers of capital and not creators. Crudely speaking, they take land and convert it to output X. The value of X tends to be lower than the value of the land.
The country has such a long way to go before it can stand on the same footing as the US or even some of the European countries whose economies it is supposedly surpassing.