BHR India Econ

8/14/2019 BHR India Econ

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A. Uniqueness - Indian economy is growing fast and shows no signs of stopping

Venkatesh 7/25/08, Rediff News. http://inhome.rediff.com/money/2008/jul/25mrv.htm

First, let us seek to understand the overall picture of the nation. Indian economy is fast emerging as

the new shining star, as it increasingly gets integrated with the global economy. Never in the

recorded history of mankind has a democracy of India's size and complexity consistently grown in

excess of over 6 per cent per annum for so long. This is indeed possible thanks to the sustained hard

work of Indian entrepreneurs, the genius of Indian businessmen and the overarching discipline of

Indian families. It is our democracy and the complete reliance on domestic capital that makes India's

growth story that much more spectacular when compared to that of China or any other country.

B. Link - High oil prices crush the Indian economy

The Washington PostJuly 27, 2008 (Why this run-up is different, lexis)

Abroad, riots shook India after the government trimmed fuel subsidies. Truckers in Britain, France,

Spain and South Korea have clogged the roads to protest rising fuel prices. In the Philippines, soaring

prices for oil and petroleum-based fertilizer have derailed the economy and ignited calls for a cut in

the tax on oil imports. With her popularity at a record low, President Gloria Macapagal Arroyo is

expected to confront the issue in a nationally televised speech scheduled for Monday.

C. Impact

1) Collapse of Indian Economy Leads to Indo Pak War

Lal Khan December 26 2001 (Asian Marxist Review India and Pakistan: Shadows of yet another

war) http://www.marxist.com/Asia/indpak_shadows_of_war102.html

However, the main cause of this tension and war hysteria is the intense socio-economic crisis that has

been aggravated by the impact of the recent recession in the world economy. The Indian and Pakistani

ruling classes are trying to use this chauvinism, war, or threat of war, acts of terrorism and other

calamities to further subdue the working classes already suffering from the crushing exploitation under

capitalism and imperialist domination. The workers in India have been subjected to some of the

harshest attacks in the recent period. There have been massive redundancies, cuts and a spate of

economic measures dictated by the IMF and imperialist institutions while military spending has

rocketed. The deepening crisis of Indian capitalism further compels the ruling state to intensify its

attacks on the working class. Ironically the traditional left leaders and intellectuals have been playing

along with the tune of the ruling elite in the name of "nationalism" and "democracy"


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2) Indo pak War leads to Global nuclear war

CDIJune 18, 2002 ( central for defense information India and Pakistan: War in the Nuclear Shadow?)

http://www.cdi.org/nuclear/nuclearshadow.cfm

This instability is exacerbated by proximity. As neighbors, nuclear missiles would arrive in minutes in

an attack, meaning the leaders have little time to verify intelligence about the other's intentions. Given

the fear of having his small arsenal destroyed and the short decision timetable, either nation's leader

might then order a nuclear attack based on faulty reports that the other is preparing to strike. For

instance, although both sides generally keep their warheads stored separately from the delivery

vehicles, during a crisis like the current one, this may change. The need to quickly arm the weapons

might be misconstrued by the other side as presaging an imminent launch, leading that state to launch.

Moreover, the risk of a disarming first strike might lead one side to delegate launch authority to

military leaders in the field who lack their leader's discretion. A conventional Indian attack that severed

Pakistani command and control might lead a rogue Pakistani military officer to launch a nuclear attack

on his own. Additionally, a stunning military victory by India might lead the extremists within the

Pakistani military and intelligence agencies to unseat Musharraf. Islamic extremists might not be

deterred by the prospect of nuclear war.


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UNIQUENESS ECONUP

India is the emerging giant of economy

DUBLIN7/23/08 Research and Markets BUSINESS WIRE (http://www.marketwatch.com/news/story/india-emerging-giant-shedding-light/story.aspx?guid={AFCD5AF8-79CF-4494-93F3-AD847B64772C}&dist=hppr)

( http://www.researchandmarkets.com/research/ba5e4f/india_the_emergin) has announced the addition of the "India: The

Emerging Giant" report to their offering. India is not only the world's largest and fiercely independent

democracy, but also an emerging economic giant. But to date there has been no comprehensive account of India's

remarkable growth or the role policy has played in fuelling this expansion. India: The Emerging Giant fills this gap,

shedding light on one of the most successful experiments in economic development in modern history.Why did the early promise of the Indian economy not materialize and what led to its eventual turnaround? What policy

initiatives have been undertaken in the last twenty years and how do they relate to the upward shift in the growth rate? What

must be done to push the growth rate to double-digit levels? To answer these crucial questions, Arvind Panagariya offers a

brilliant analysis of India's economy over the last fifty years--from the promising start in the 1950s, to the near debacle of the

1970s (when India came to be regarded as a "basket case"), to the phenomenal about face of the last two decades. The author

illuminates the ways that government policies have promoted economic growth (or, in the case of Indira Gandhi's policies,

economic stagnation), and offers insightful discussions of such key topics as poverty and inequality, tax reform,

telecommunications (perhaps the single most important success story), agriculture and transportation, and the

government's role in health, education, and sanitation.

Indian economy high now

Maya Kaneko Friday, 7/25/08

(http://www.istockanalyst.com/article/viewiStockNews+articleid_2436582&title=Indian_Secretary_Upbeat.html)

"The Indian growth story is credible and intact. The Indian economy has logged a growth of 8 to 9 per cent perannum over the last five years," said Subbarao at a roundtable meeting with Japanese business representatives in Tokyo.

Subbarao also said India is keen to develop its infrastructure to boost its manufacturing sector and New

Delhi is seeking investments from domestic and foreign private-sector companies to supplement the

government's spending in building facilities. The Indian economy is expected to post a 7 to 9 per cent

growth in 2008, as the country has been relatively less affected by the global financial turmoil and economic downturnstemming from the US subprime woes, he said.

India econ is on the rise

Corporate Bureau July 26, 2008(http://www.financialexpress.com/news/Ficci-s-100-day-agenda-for-double-digit-growth/340477/)

We feel its is imperative for the government to re-ignite investment across the economy. The expansion of the Indian

economy over the last four years has been on the back of increasing investment inflows and rising

investment to GDP ratio. Therefore, it is important for the government to sustain and stimulate such investments in criticalsectors so that growth is maintained, Chandrasekhar said.


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UNIQUENESS ECONUP

Indian economy is unaffected by global slowdowns and continues to grow

Kaneko 7/25/08

Maya.

http://www.istockanalyst.com/article/viewiStockNews+articleid_2436582&title=Indian_Secretary_Upbe

at.html

The Indian economy is expected to post a 7 to 9 per cent growth in 2008, as the country has

been relatively less affected by the global financial turmoil and economic downturn stemming

from the US subprime woes, he said.

India is an emerging economic giant

Oxford University Press March 08

http://www.researchandmarkets.com/research/ba5e4f/india%5fthe%5femergin

India is not only the world's largest and fiercely independent democracy, but also an

emerging economic giant. But to date there has been no comprehensive account of India's

remarkable growth or the role policy has played in fuelling this expansion. India: The

Emerging Giant fills this gap, shedding light on one of the most successful experiments in

economic development in modern history.

India economy is high and will continue to be high

Sarah Regan 7/25/08 (The News http://www.ngnews.ca/index.cfm?sid=156425&sc=49)

As India and China's economy becomes richer people are diversifying their diets. They tend to be choosing moreprotein and eating more meat. Meat takes grain to produce, which has driven up the price of grain." Clark, a professor of

economic in the department of business and social science at the Nova Scotia Agricultural College, says one thing we can be

sure won't be downsizing anytime soon is China and India's economy.

India is growing now

CIOL Bureau7/21/08 (http://www.ciol.com/SMB/News-Reports/New-Boundary-Taarak-ally-in-India/21708108138/0/)

India's economy is growing at an unprecedented rate, and that growth is being fueled in part by new IT

adoption," said Tony Lorusso, Executive Director of the Minnesota Trade Office. "This partnership

between New Boundary Technologies and Taarak India is a great example of how Minnesota

businesses can expand and benefit from participating in the global marketplace."
http://www.ciol.com/SMB/News-Reports/Intel-launches-SMB-online-marketplace/14708107923/0/http://www.ciol.com/SMB/News-Reports/Intel-launches-SMB-online-marketplace/14708107923/0/


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UNIQUENESS ECON DOWN

Indias econ boom is over

Graham 7/23/08, http://www.fool.com/investing/international/2008/07/23/is-indias-miracle-over.aspx

India's BSE Sensex is 33% off its January highs. Foreign investors are fleeing the country, selling a net

$5.9 billion in Indian shares. Inflation is at a 13-year high, and while GDP growth is strong, it's expected

to slow through the rest of the year.

India has low economy and therefore poverty

Randeep Ramesh7/25/08, Delhi (http://www.guardian.co.uk/world/2008/jul/25/india.olympicgames2008

Although India's economy is growing, the country is mired in poverty. Nearly 8 million children suffer frommalnutrition and more than 250 million live below the poverty line "Ill health and poor nutrition can

hamper early childhood development. In addition, lack of information and lack of access can effectively

exclude larges swaths of a country's population. The resulting small percentage of effective participants helps explainmore fully why despite such a large population and a large potential talent pool, a country ends up winning very few Olympic

medals," the paper's authors wrote in the Bombay-published journal Economic and Political Weekly.

India slipped into a backdrop economically

IRIS, 7/25 2008

(http://www.myiris.com/newsCentre/newsPopup.php?fileR=20080725151735194&dir=2008/07/25&secID=livenews)

It is becoming increasingly difficult to sustain business environment in high interest and surging inflation & tax regime,according to Assocham managing committe. It apprehended that Indian economy could slip into low growth

phase, causing large number of job losses if the reserve bank of India (RBI) chooses for

further tightening of interest rates to tame the rising inflation. The present interest rates are at peak and anyfurther rise in the rates would slow down the growth as well as employment outlook for the economy. IIP for the month of May,

2008 also has touched six year low to stand at 3.8%. The global meltdown has induced a bearish phase in the stock

market of India. The bourses have seen more than 40% fall in last six months from their peaks. The international credit

rating agency Fitch has also downgraded India`s ratings from `stable` to `negative` because of fiscal

pressure on the economy.

India is slowing down economically

ET Bureau7/28 2008,

(http://economictimes.indiatimes.com/Market_News/RBI_may_go_for_prudential_measures/articleshow/3292625.cms)

Citi, in a report on the Indian economy, said that there are clear signs of growth slowing down.

Industrial production has slowed with average three month moving average coming in at 4.7% v/s

12.2% a year ago. Capital goods production has been particularly weak, with the 3-month moving average now coming in at

8.3% from double-digit growth earlier. This could be attributed to monetary tightening and restrictive ECB

norms which actually aids capital goods imports, the report said.
http://www.fool.com/investing/international/2008/07/23/is-indias-miracle-over.aspxhttp://www.guardian.co.uk/profile/randeeprameshhttp://www.guardian.co.uk/profile/randeeprameshhttp://www.guardian.co.uk/profile/randeeprameshhttp://www.fool.com/investing/international/2008/07/23/is-indias-miracle-over.aspxhttp://www.guardian.co.uk/profile/randeepramesh


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INTERNAL LINKS - OIL K TO ECON

Crude oil prices are driving up Indias deficit.Utkarsh V. Koregaonkar July 21, 2008 (Indias Strong Growth Should Continue,

http://seekingalpha.com/article/85979-india-s-strong-growth-should-continue)

Back in India the rise in the prices of crude oil has impacted foreign exchange reserves because of

the increased burden of payment of dollars to oil producing nations. As of today the cost of oil imports

is about 40% of the country's total exports. India imports 1.1 billion of oil annually with the current

cost of crude for India approximately 120 USD a barrel.

The FIIs are going for short trades in the equity market on every piece of bad news and making profits

by selling high and buying low in the market, leading Indian investors to lose money and faith. As the

government is not passing the entire price increase off to consumers and giving price subsidies to

them instead, there is no incentive for the Indian public to consume less or change theirconsumption habits and help in conservation of petroleum products. Subsidies and oil bonds issued

by the government increase the fiscal deficit. It has already increased from 2.5% a year ago to 4.5%

today. Add to this current inflation imported to India because of oil and metals, and you have higher

interest rates, across the board.

Indias economy is extremely sensitive to the price of oil.

CNBC July 26, 2008 (Mkts to trade sideways in near-term: Credit Suisse AM,

http://www.moneycontrol.com/india/news/fii-view/mkts-to-trade-sidewaysnear-term-credit-suisse-

am/21/00/348937)

A:Things are more positive. With respect to oil, we have come off from the peak of close to a USD

150 per barrel to where we are at the moment at about USD 126 per barrel.

As we go into August and September, I see no reason to change my view that oil will settle down in a

range of a USD 100 to USD 120 per barrel. So, that is positive. India as a consumer of commodities in

contrast to markets like Brazil and Russia and is highly sensitive not just to the oil price but also to the

whole range of commodities.

Oil prices are becoming central to the Indian Economy.

Journal of Commerce June 23, 2008 (Big Changes Due to Oil, lexis)

Of course, prices could reverse. Saudi Arabia said it will begin pumping more oil, and the global

economy could slip into a recession, dampening demand. At some point, alternative energy might

reduce demand for fossil fuel. But assuming that the rising price of oil, like soaring prices for manycommodities, is being driven by the long-term trend of developing countries such as China and

India, growing at 9 percent a year or more and unwilling to put the brakes on growth for the sake of

the environment, current - or more likely higher - price levels no doubt will become a permanent

fixture of the economy.
http://seekingalpha.com/article/85979-india-s-strong-growth-should-continuehttp://www.moneycontrol.com/india/news/fii-view/mkts-to-trade-sidewaysnear-term-credit-suisse-am/21/00/348937http://www.moneycontrol.com/india/news/fii-view/mkts-to-trade-sidewaysnear-term-credit-suisse-am/21/00/348937http://seekingalpha.com/article/85979-india-s-strong-growth-should-continuehttp://www.moneycontrol.com/india/news/fii-view/mkts-to-trade-sidewaysnear-term-credit-suisse-am/21/00/348937http://www.moneycontrol.com/india/news/fii-view/mkts-to-trade-sidewaysnear-term-credit-suisse-am/21/00/348937


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INTERNAL LINKS - OIL K TO ECON

Indias economy and oil are tied at the hip.

\The Salt Lake Tribune April 30, 2008 (Dyer: Even if oil prices fall, we must cut long-term demand,

lexis)

I am the most modest of men, but I reckon this gives me the right to offer some further forecasts. So I

predict that the price of oil will soon fall - a bit. So far, the economies of the "Brics" (Brazil, Russia,

India and China) are still growing strongly, but the old industrialized economies are definitely

heading into a recession, and they still consume most of the oil.

Oil prices affect the Indian economy.

San Jose Mercury News July 9, 2008 (Current explosion in oil prices stands market on its head, lexis)

Nevertheless, prices are so high now that a delayed but powerful reduction in demand is taking

shape.

Recent fuel price increases in China, India and elsewhere show that the costs of subsidizing oil use

are forcing governments to face up to market forces. Also, high prices and a slowing economy are

increasingly undermining demand in the rich countries. U.S. oil demand is declining at an annual

pace of 2 percent, for example.

As a consequence, the next big move in oil prices within the next year or two will be downward.

Finally.


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INDO/PAKWAR EXT - TERRORISM

Indo Pak war Leads to nuclear Terrorism

Farooq TariqJanuary/February 2002 ( International View Point India/Pakistan

Is war imminent?) http://www.internationalviewpoint.org/spip.php?article512

The governments of both India and Pakistan are on a road to disaster. It is likely that both governments

will go further than economic and other sanctions against each other. These are the first steps on the

road to a real war. Both countries have gone to war against each other several times in the past. The last

limited war was in 1998. The mad politicians of India and military regime of Pakistan were on the same

side with the international community during the Afghan American war. Now they both blame each

other of harbouring terrorism via armed religious fundamentalists on the question of Kashmir.

They want to take the American road to score their points. War is the only solution, that is the

conclusion these mad rulers are drawing after the events of last three months. The American war on

Afghanistan has brought no peace or relief from the so-called terrorists. On the contrary, it has

increased the danger to world peace. The world is closer to a nuclear war than ever before in history.


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IMPACT ECONOMY

A. Indias economy is key to the global economy new economic sectors prove

Business Week, 3/8/07, [Navin Chadda, Managing Director at the Mayfield Fund which has invested in

two Indian companies, India's Economy: Off the Launch Pad,

http://www.businessweek.com/technology/content/mar2007/tc20070307_581741.htm?chan=top+news_to

p+news+index]

When I talk about India, I often refer to the image of a rocket ship launching. The country is taking off,

and I see this in real time when I travel there every six weeks. The Indian economy is one of the fastest

growing in the world, with GDP growth touching 9.3% last year. Simultaneously, India is experiencing

exponential domestic growth for retail products and services due to the burgeoning middle class,which consists of 300 million consumers. Many people still equate India with off-shoring and the IT

services of Infosys (INFY), TCS, and Wipro (WIT). While those remain dominant, over the past five

years Indian companies have vaulted new sectors to prominence on the global stage including

technology, manufacturing, pharmaceutical, infrastructure, energy, consumer retail, telecom, financial

services, media, and hospitality. India has developed a global brand that reflects its best-of-breed ability

in not only IT but many other industries as well.

B. Global economic decline would cause a nuclear war

Walter Russell Mead, Senior Fellow for U.S. Foreign Policy at the Council on Foreign Relations, World

Policy Institute, 1992, p. unknown

Hundreds of millions billions of people have pinned their hopes on the international market

economy. They and their leaders have embraced market principles and drawn closer to the west

because they believe that our system can work for them. But what if it cant? What if the global

economy stagnates or even shrinks? In that case, we will face a new period of international conflict:

South against North, rich against poor. Russia, China, India these countries with their billions of

people and their nuclear weapons will pose a much greater danger to world order than Germany and

Japan did in the 30s.


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INDIA K GLOBAL ECON EXT.

Indian Middle class Drives Global economy from recession

Hazel Heyer | May 07, 2008 (Global Travel Industry News China, India play key role in global

economic meltdown) http://www.eturbonews.com/2414/china-india-play-key-role-global-economic-

mel

Today, Indias middle class is in the drivers seat. The world has not noticed because the consumption

package rate was slow. It was not nothing investors worldwide were concerned about when world rates

were $8 per day for non-poor in the western world. Today, Indias large force middle class boasts

creating higher level of economy that has escaped poverty. Though it does not impact government

policies, it demands working in a level playing field which certainly makes government react with

middle class demands, said Bhalla.

India and Chinas middle class today is the non-absolute poor in the developed world, out of an

absolute poverty line of PPP $1.08 (1993) compared to the absolute poor, developed economies PPP

$7.77. The middle class line was approximately PPP $3700 per capita per year in 2007 price levels.

Purely out of self-interest, this economic strata believes in market virtues as the only way to prosper.

The middle class believes in property rights, free trade, rules of the game and anti-corruption, added

Bhalla.

India boosts Global economy by 10% yearly

Joydeep Gupta 01-08-2007 ( India Internacts Booming India key to global economic growth)

http://indiainteracts.com/columnist/2007/08/01/Booming-India-key-to-global-economic-growth/

India receives more inward remittances than any other country in the world by the 20 million-odd

Indians living abroad; and the boom in information technology (IT) and IT-enabled services (ITES) has

seen India become the back office of the world for vital functions that range from school homework

guidance to booking airline tickets.

The Indian IT-ITES industry notched up $39.6 billion in revenues in 2006-07, up 30.7 percent from the

previous year.

There is an air of justified optimism about India's long-term economic prospects today. There are at

least three reasons for this. First, savings and investment rates are rising and are presently at around 32

to 34 percent of India's gross domestic product. Economic analysts believe they may rise to somewhere

between 37 and 40 percent of the gross domestic product (GDP) by 2013.


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India is key to the global economy recent years and growth in the technological sector prove

The Australian, 9/24/04, [Mark Thirlwell, program director, international economy, at the Lowy

Institute for International Policy, is author of the recently published Lowy Institute Paper, India: The

Next Economic Giant, Booming India deserves attention, l/n]

Yet beginning in the 1980s, with a cautious shift to a more pro-business environment, and accelerating

in the next decade after a financial crisis in 1991, Indian economic policy has taken a different direction.

A series of governments have liberalised domestic markets while seeking to re-engage with the global

economy. True, the resulting reforms have been cautious, partial and at times faltering. Policy-makers

still have to grapple with tough challenges, including fiscal fragility and regional inequality. But reform

has transformed India into one of the fastest growing economies. What has been particularly intriguing

about this transformation is that it has taken a uniquely Indian path. Economic development in East Asia hastended to follow a standard model, based on the mass production of manufactured goods and a gradual move up

the value chain. In contrast, India is making its mark in the global marketplace by exporting services, competing in

areas that traditionally were thought to be the preserve of more developed economies. India's growth model

rests on a marriage of technological progress in the telecommunications sector with a large supply of

well-educated, English-speaking and relatively low-cost labour. This has allowed India to grab market

share in the information technology and business process outsourcing sectors. In principle, India has

the potential to be competitive across an even broader range of services. The more successful India that

is being forged by this model has the potential to reshape the global economy. It will mean a higher

standard of living for more than 1 billion Indians, about 17 per cent of the world's population. And with

an estimated one-third of the world's poorest people living on the subcontinent, a healthier Indian

economy will have a significant effect on global poverty. IT should also be good news for the rest of theworld. A stronger and more dynamic India means new markets for goods and services. India's

development model, moreover, gives the international economy access to an enhanced supply of high-

quality skilled workers. Over time, this boost to the effective global stock of human capital should provide aspur to international productivity and hence to global growth prospects. India's rise will also bring adjustment

strains for other countries. Its growing presence in the market for services is leading to the birth of a truly global

labour market, with all the challenges that entails. As services account for the largest share of output in developed

economies, that means the eventual effect of India's service revolution on patterns of employment and growth in

the developed world could prove to be greater than that of East Asia's manufacturing revolution. At the same time,

India's growing importance, combined with a powerful China, will accelerate the shift in the

geographic distribution of economic power back towards Asia. This in turn has implications for the

architecture of international economic diplomacy. Existing mechanisms for governing the world

economy will have to adapt to this changing balance of power or lose relevance.


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India is key to the world both politically and economically

Sydney Morning Herald, 9/14/04, [Louise Williams, India's rise tipped to cause world

power shift, l/n]

Dr Mark Thirlwell, author of the report India, the Next Economic Giant for the Lowy Institute for

International Policy, said India's rise was generally good news for the Australian economy. But the

inevitable growth of IT outsourcing to India would almost certainly be politically controversial.

India's economic power differed from China's because its recent growth was based on drawing on its

huge pool of skilled, English-speaking labour, rather than the low-cost manufacturing that has

fuelled China's growth. "The eventual impact of India's rise will be much greater than the headline-

grabbing story of China," Dr Thirlwell said. Globally, the combined economic power of China andIndia would shift economic activity to Asia, away from Western economies, he said. "Existing

mechanisms for governing the world economy such as the [Group of Seven] will become less

relevant, and will have to be replaced or augmented by institutions that recognise the importance of

the emerging Asian economies. "The changing economic balance will also have implications for

international diplomacy, including the composition of the United Nations Security Council." ForAustralia, Dr Thirlwell predicted a rise in sensitivities over the outsourcing of jobs - an issue that had already had political implications for

India's main service sector market, Britain and the United States. As an important English speaking economy, Australia is clearly an obvious

market for India, and most Indian IT companies have representation here." Unlike low-cost manufacturers, especially in China, India's service

centre would increasingly compete with service sectors in advanced economies, threatening white collar jobs. The report noted the "barrage of

criticism" over the exporting of jobs to India following Telstra's recent outsourcing push and IBM's plan for an Indian subsidiary to fulfil Telstra

contracts. The Minister for Trade, Mark Vaille, who launched the report yesterday, said Australia could not seek to expand its exports to India

and at the same time put up barriers to outsourcing. He said Australia would be open to moving towards a free trade agreement with India, but

that agricultural sensitivities meant it was a long-term prospect. Dr Thirlwell said future Australian governments would have to act to protect

workers who lost out to competition from India's service sector. However, historically, Australia's economic prospects had benefited from the

rise of Asian powers. "The birth of another Asian economic giant should be seen as yet more positive news." India's economic growth

had implications for global poverty alleviation, he said. One-fifth of the world's population lived in

India, but also one-third of the world's poor.


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Economic Growth Impact

indian economic growth key to us-indian relationsAuztrevicius and Boozman in 8Petras and John, The Rise of the Indian Economy: Transatlantic and Global Implications, NATO

Parliamentary Assembly, http://www.nato-pa.int/Default.asp?SHORTCUT=1472

A changing global order and rapid Indian growth have fostered conditions for India to

redefine its place in the region and in the world. No longer mired in economic stasis, Indiacomes to the diplomatic table buoyed by its ever more formidable economicpresence.This alone endows it with a kind of weight that demands other great

powers pay it close attention. That this wealth is being generated in the world

economy is consequential. India now holds a greater stake in the global trading and financialsystems. India's foreign policy has undergone a profound transformation since 1991 that has more or

less paralleled its economic transition. India's relations with the United States andEurope were not well developed in the post-war period, partly due to its inward looking

development strategy, its socialist economic organization, its special relationship with Russia and

its role in the non-aligned movement. India's relations with China and Pakistan were also tense and, at

times, overtly hostile. Indian relations with the United States, Pakistan, China and Russia

have evolved substantially over the last decade. The collapse of the Soviet Union,

the end of Cold War rivalry, and the apparent failure of Soviet-style economic planning all compelled

Indian leaders to revamp the country's international posture. India began to buy into theeconomic principles for which the West stood, and this, almost by default, pointed

a way toward improved relations with the United States in particular, but alsowith Europe.

Relations are key to American primacyTellis, 7Ashley, Senior Associate at the Carnegie Endowment for International Peace What Should We Expect

from India as a Strategic Partner?, March, http://www.carnegieendowment.org/files/tellis_chpt08.pdf

What does it mean, then, to say that U.S.- Indian interests are strongly convergent, if bilateral

collaboration cannot always be assumed to ensue automatically? It means three things. First, that there

is a grand summum bonum that the two sides can secure only collaboratively, even though each party

is likely to emphasize different aspects of this quest. For the United States, the ultimate value of theU.S.-Indian relationship is that it helps preserve American primacy and the exercise thereof

by constructing a partnership that aids in the preservation of the balance of power in Asia,enhances American competitiveness through deepened linkages with a growing Indian

economy, and strengthens the American vision of a concert of democratic states by

incorporating a major non-Western exemplar of successful democracysuch as India. For India,the ultimate value of the U.S.-Indian relationship is that it helps New Delhi to expand its national

power. Although this growth in capabilities leads India inexorably to demand formally a multipolar


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Lab BHR 15/15

India OIL SDI 2008

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world a claim that, strictly speaking, implies the demise of American hegemonythe leadership in

New Delhi is realistic enough to understand that American primacy is unlikely to be dethroned any

time soon and certainly not as a result of the growth in Indian power. Rather,because Indian power

and national ambitions will find assertion in geographic and issue areas that are more likely to becontested immediately by China rather than by the United States, Indian policymakers astutely

recognize that only protective benefits accrue to New Delhi from American primacy, despite

their own formalbut not substantivediscomfort with such a concept

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BHR India Econ