The Ill Wind from the West

NEW DELHI – At the nadir of the financial crisis four years ago, many Asian governments came to believe that robust growth had led to a near-“decoupling” of their economies from the West and its ongoing problems. But now, as the eurozone teeters and America’s recovery weakens, Asia, too, is showing signs of faltering.

Some Asian politicians will, quite conveniently, blame the West for any softening of growth. But their failure to pursue necessary structural reforms and economic opportunities is equally responsible, if not more so, for the region’s growing travails.

Consider India. According to the forecaster International Market Assessment, “capital flows that have dried up are not…a reflection of global market conditions,” but of a loss in confidence among investors, arising principally from fiscal mismanagement, which has led to “price instability, falling investments and eventually a decline in…growth.” With the “government in dormancy,” IMA concludes, “India is quickly losing the plot.”

India’s situation is indeed worrisome. Double-digit food-price inflation has been accompanied by debate about the share of Indians living below the poverty line, and, indeed, where the poverty line should be drawn. Official statistics use an average daily income of 32 rupees ($0.57) a day to separate the merely poor from the desperately impoverished.