India

There have been few moments in recent decades when South Asians could look at East Asian economic performance with anything but envy.¹ After all, the South Asian economies have only just started to move along the path of rapid development that East Asians embarked on much earlier and, until this crisis, with such remarkable success. Since the middle of 1997, the almost unthinkable has happened. In contrast to crisisridden East Asia, South Asia seems a region of economic stability and of quite respectable growth: annual growth rates of 6–7% are accepted as ‘normal’, and the fabled ‘Hindu rate of growth’ (3.5% p.a.) apparently a fading memory. There has been a barelyconcealed sense of relief among South Asian policymakers and technocrats that their economies have escaped contagion and experienced no major turbulence, despite some initial jitters. The more perceptive among them are aware, however, that the chill winds blowing from the East Asian crisis could spell trouble. Nevertheless, mixed with the worry and apprehension about what this crisis and its after-effects portend for their economies, many South Asians also feel an understandable, if not laudable, satisfaction at seeing the fast-running East Asians stumble and fall. The crisis raises many questions of profound importance for South Asia. How have its countries – poorer, more backward, far less dynamic and far more crisis-prone in the past – escaped the sickness that brought the tiger economies low? Are they really immune to the East Asian virus? What direct and indirect impacts will this crisis have on their economies? And how should they respond to the new challenges and opportunities?