CNN 2011-12-23

Last week marked exactly 10 years since the term"BRIC"was coined.The cagey acronym 1 for Brazil,Russia,India and China used to describe the new powerhouse emerging markets.But the man who invented the moniker now says one of the four has been a great disappointment,though not Russia with all its recent troubles,not Brazil whose economy contracted in the last quarter,and certainly not china which continues to power on.Goldman Sachs Jim O'neill says that the country that has been the biggest let-down has been India.He pointed 2 out this last week that India's inability to attract foreign investment could actually lead to a brows of payments crisis.From BRIC to basket case,what in the world is going on? Well,some numbers tell a troubling story:growth has dipped below 7% for the first time in two years.The indian rupee is the Asia's worst performing currency this year,falling to a historic low against the dollar.India's deficits 3 are soaring and funding is drying up.India received less than 20 billion dollars in foreign direct investment in the first 6 months of 2011.China got 3 times that amount.Even Russia with a smaller GDP took in more.Why is India struggling? Sadly the real problem isn't economics.India has a very dynamic private sector 4,probably the most dynamic Indian emerging markets.But it has a government that simply doesn't work and it is not for lack of knowledge.India has the know-how 5 and the government is after all led by a reform-minded,world-class economist,Prime Minister Manmohan Singh.The problem is politics.The world's largest democracy seems to be paralyzed,since government recently announced a plan to open up India's retail 6 sector to foreign investors,a continuation of the reforms that jump-started the economy 20 years ago.The proposal would have made it easier for big western chains like Wal-Mart to set up a shop in India.Now,Indian agriculture is hugely inefficient,_huge cuts and because supply chains are inefficient,up to a third of farm products,vegetables for example rot before they reach the markets.So the Wal-Mart model would transform India's agriculture and its retail sectors 7 that would empower farmers,lower prices for consumers and creat huge gains of productivity.But it was not to be.Opposition 8 turned this into a story of the big guy fighting the little guy.Wal-Mart was_.Parliament was_for days and politicians mobilized mass demonstrations 9.Small stores across the country were kept closed in protest.So,what does the govenrment do? Instead of standing 10 firm,it backtracked and cancelled plans to reform the retail sector altogether.This is a depressingly familiar pattern.For 2 years now,India's government has done nothing,hanging onto power,presenting no plans to open up the economy,raise living standards,build infrastructure 11 or attract new investment.In the west,India's leaders sell a story of a dynamic,incredible India.India,Incredible India.But at home,they abandoned the populist,protectionist sentiment and_subsidies and do bascially nothing.And that paralysis 12 is hurting the economy.India's blessing 13 and curse is that it has a messy,chaotic and decentralized democracy.Unlike China it has no unified 14 sense of direction but the prevailing 15 view has often been that when the going gets tough,New Delhi gets its act together.That's what it did 20 years ago when it was on the brink 16 of defaulting and the brows of payments crisis.Well,this time once again,it's time for urgent reform.New Delhi has for years expressed try and be part of the Brics.Well if it doesn't get its act together,10 years from now,People might still be praising the Brics,except that the"I"in the Bric might stand for Indonesia,not India.