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Asia anxious over the wrong kind growth

Business, China, Economics, India
By John Richardson on 29-Jul-2009

Like this for a while longer?

Indiantrafficjam.jpg

Source of Picture: Bahnuprasad.net/blog

The question, of course, is what is the right kind of growth?

If you are trader of whatever kind the only growth you care about is in aset values. In other words the more bubbles the better and as long as you get out in time before they pop, marvellous.

But if you are government or a company it’s obviously a lot different as this excellent column from Lex of the Financial Times points out.

India’s alarm over inflation raises a quandary: Does it rein back spending on infrastructurre to bring govt spending (the main culprit of the rising cost of living) under control or raise corporate taxes and attack the hugely overmanned civil service.

The big and well-connected companies are likely to resist tax hikes with equally well-placed civil servants unlikely to lobby fo their own extinction.

The end-result could be a slowdown in the infrastucture spending necessary to unlock all that rural potential – meaning chemicals consumption remains a fraction of what it is in China.