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India: The New Star of Asia

Prepared by: Esther Pan
June 21, 2006

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India is entering an unparalleled period of growth and accomplishment. The country's economic development—rooted in skilled labor, outsourcing, and the high-tech industry—is so dramatic that TIME heralds "the rise of the Indian elephant." The implication is that the rest of the world will need to make room. With an economy growing at 8 percent per year—and projected to reach 10 percent next year—India's democratic society looks like the new star of Asia. Indian diplomat Shashi Tharoor may be the next Secretary-General of the United Nations (newKerala.com). India's leaders are actively working to increase the country's regional and international standing, as C. Raja Mohan writes in the July/August issue of Foreign Affairs. Even Bollywood is showing India's new confidence by venturing abroad to shoot its films in locations from Malaysia to South Africa—and drawing hordes of devoted fans along in its wake (Asia Times). Fareed Zakaria writes in Newsweek that India is widely acknowledged to be the new star on the world stage.

The United States has taken note of India's new status. Congress is considering an unprecedented nuclear deal with Delhi, part of the Bush administration's efforts to strengthen ties with the growing power. Ashton Carter writes in Foreign Affairs that despite the deal's flaws, it is worthwhile because India is likely to become a valuable U.S. security partner. Some experts say a close alliance with India is also a way for the United States to hedge against China's growing dominance in Asia. The complex relationship between India, China, and the United States is examined in this Backgrounder.

But India is no superpower yet. It is still bedeviled by an array of daunting problems. India has 15 percent of the world's population and only 2.4 percent of the world's land. It is plagued by widespread poverty, rapidly growing inequality, and nearly six million people infected with HIV (UNAIDS). Conn Hallinan, a foreign policy analyst for the think tank Foreign Policy in Focus, writes that two Indias are emerging: one a booming growth zone for the prosperous middle class, and the other a bleak landscape where child mortality is greater than in Bangladesh and the rural poor have no hope of escaping their desperate straits.

Delhi must grapple with serious issues. Malnutrition is stunting the country's economic growth prospects; efforts by Prime Minister Manmohan Singh's government to set hiring quotas for lower-caste Indians have sparked furious protests (Economist); and India's poor, slow-growing states are the least able to create jobs in the private sector and most hurt by economic volatility, as Catriona Purfield writes in this IMF report. A USAID report on sustaining India's growth says the country needs a massive inflow of capital investment and must learn to better allocate its resources to reduce poverty.

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