"2009–10 redefined India’s place in the world, economically and politically. It also revealed, in graphic fashion, the meshing of the global and the local in shaping India’s economic policy challenges and the policy space available to react to them..

 

At the time I wrote last year’s message, it was already clear that the Indian economy had demonstrated considerable resilience in the face of a huge shock to global finance and to international trade. After a frightening couple of quarters in the second half of the previous fiscal year (2008–09) the economy was well on the way to recovery. By that time, India had already participated in the first two meetings of the G–20 leaders (in Washington DC and in London). The country’s strong economic performance both prior to and during the crisis had made it an increasingly respected voice in shaping the global economic policy response."

"This resilience, at a time when the nation was in the throes of an uncertain general election, and shortly after the devastating attack on Mumbai in November 2008 made the swiftness of the recovery even more impressive. It stood in sharp contrast to the fragility and brittleness of the Indian economy a couple of decades earlier. In effect, the collapse of global finance and global trade in the six months after the bankruptcy of Lehman Brothers in September 2008 represented a systematic, unexpected “stress test” for the Indian economy, Indian policy-making and Indian politics. With the passage of an intervening year, it seems now reasonable to conclude that the society passed this stress test remarkably well."

"The effect has been to enhance further the growing international confidence and credibility that India has increasingly enjoyed since 2004, when economic growth reached a higher sustained level than ever before. While informed observers of the Indian economy were aware of India’s consistent growth over almost thirty years, the performance in the second half of the last decade attracted broader international attention. One consequence of this increasing prominence has been India’s progressive induction into the inner councils of international economic policy, initially on trade (through the WTO) and in global monetary affairs through our participation in the Bank for International Settlements (BIS) and the IMF, and more recently in climate change negotiations and global financial regulation (with our induction onto the Financial Stability Board)."