The return of land hunger

The Economic Survey released last February predicted that India would grow at 8.7 percent over 2007-8 – somewhat lower than the 9.4 percent by which it grew in 2006-7, but not very different from the average of 8.6 percent growth rate over the past four years. Perhaps even more impressive, over the same period per-capita income growth averaged 7.2 percent, more than twice the average rate of 3.4 percent experienced during the 1980s and 1990s. The review also noted that India's manufacturing growth remained robust, predicted to grow at 9.5 percent during 2007-8, albeit somewhat lower than the 12 percent of the previous year. It is reasonable, therefore, that the Survey should conclude that the Indian economy is in good health.

India's stock markets, even though they have been very badly roiled by the sub-prime crisis of US markets, are still in positive territory as far as 2007-8 is concerned. The Bombay Stock Exchange, the Sensex, which is currently around 15,000 having lost 5000 points since January, is still more than 13 percent higher than where it was in the beginning of the fiscal year, in March 2007. The Sensex had crossed 13,000 for the first time only in October 2006. But more important than the stock market, Indian private capital finally came of age, showcasing itself in the USD 12 billion takeover of the Anglo-Dutch company Corus by Tata Steel in April 2007, and the fact that Tata Motors is currently the leading bidder for the purchase of the Jaguar and Landrover brands from Ford Motors. But it was not just the Tatas: Videocon, Suzlon, Ranbaxy, Mahindra & Mahindra and the A V Birla Group were all involved in major acquisitions abroad. Corporate India was on a buying spree, spending 60 percent more on acquisitions abroad than foreign firms spent on acquisitions in India in 2006-7.