What explains India’s peculiar stability? In a tricky neighbourhood the country remains calm

[11MohanRedddy]

What explains India’s peculiar stability?

In a tricky neighbourhood the country remains calm

An economist with super-hero vision might stand in New Delhi, gaze in every direction and see turmoil. In Nepal, India’s neighbour to the north-east, “Gen Z” protests erupted earlier this year over inequality, as the scions of political dynasties flaunt their luxury holidays and designer clothes on Instagram while ordinary Nepalis struggle with unemployment. Further east, Bangladesh’s students led a revolution last year to overthrow Sheikh Hasina, who had been prime minister since 2009. Among their grievances was a quota system that reserved state jobs for descendants of war veterans. To India’s south, Sri Lankans stormed the presidential palace in 2022, forcing Gotabaya Rajapaksa, the president, to flee. Mr Rajapaksa had presided over an economic crisis that left the country bankrupt, with fuel and medicine running out. To the west, Pakistan faces protests by supporters of an imprisoned former prime minister and yet another IMF rescue.

[11MohanRedddy]

 

 

[11MohanRedddy]

But not India. South Asia’s largest economy is surprisingly stable. This year the country has been both a victim of President Donald Trump’s trade war, singled out for especially punitive tariffs owing to its purchases of Russian oil, and a participant in a shooting war with nuclear-armed Pakistan. Its economy has barely noticed. Bangladesh, Nepal and Sri Lanka are all participating in IMF programmes, along with Pakistan. Meanwhile, India’s ten-year government bonds yield less than 7%, down slightly from the start of the year and far below the 12% that Pakistan and Sri Lanka are forced to cough up. India’s foreign-exchange reserves sit at around $700bn, or 18% of GDP—sufficient for 11 months of imports. Growth ticks along at 6-8% a year.

India has not always been as stable as it is today. Since gaining independence from Britain in 1947, the country has suffered repeated balance-of-payments problems. In 1965 a war with Pakistan, which followed a devastating drought, left it dependent on food aid in return for which America made it devalue the rupee. In 1991 a spike in oil prices caused by the Gulf War, and a collapse in remittances from workers in Kuwait, prompted another blow-up. The government was forced to airlift gold to Britain to act as collateral for loans. Manmohan Singh, India’s finance minister, did, however, take advantage of the crisis, using it as an excuse to begin dismantling the “licence raj” system of export controls and float the currency. That helped stabilise the economy.

Yet as recently as 2013 the country was still at the mercy of global capital. It was counted in “the fragile five” group of emerging markets by Morgan Stanley, a bank, alongside Brazil, Indonesia, South Africa and Turkey; all were vulnerable to rising American interest rates. During the “taper tantrum”, as America began to scale back its post-financial-crisis quantitative-easing programme, the rupee fell by 20% from May to August. The government responded by cleaning up the country’s banks, forcing lenders to recognise bad loans and reforming the bankruptcy code. Non-performing loans fell from 15% in 2018 to 3% this year.

Fiscal conservatism has helped, too. Sri Lanka’s recent crisis was prompted by unfunded tax cuts and deficit spending enabled by printing money. India runs twin deficits, both fiscal and current-account, but has trimmed its budget deficit from 9% at the start of the covid-19 pandemic to under 5%. The government plans to cut its debt-to-GDP ratio from 57% to 50% by 2031. Although manufacturing exports have underwhelmed, revenue from services exports—mostly business-process and IT outsourcing—now amounts to 15% of GDP, up from 11% a decade ago, which has reduced India’s dependence on foreign-capital inflows.

Even oil, long India’s sore spot, is less of a problem these days. That is partly because oil prices have been relatively low over the past couple of years. But it is also because the government and industry have reduced the economy’s sensitivity. Strategic oil buffers and new refinery capacity make a difference; so, too, does cheap imported Russian crude, which last year saved around $8bn in foreign exchange, even as it attracted Mr Trump’s ire. A mandate to mix ethanol into petrol, introduced in 2021, has annoyed drivers who fear for their engines but delighted sugar-cane farmers and reduced the fossil-fuel import bill still further.

Deep breaths

The lack of a balance-of-payments crisis is not the only reason young Indians have not taken to the streets. Just as in Nepal plenty of inequality is to be seen on social media (though much of it comes from Bollywood stars, who have at least earned their riches). Access to government jobs, as in Bangladesh, causes grievances: more than half are reserved for “backward” castes or other disadvantaged groups, which annoys everyone else. The graduate unemployment rate was 29% last year, partly because many repeatedly attempt the civil-service entry exams. Others are underemployed in gig work or engage in “timepass”, the Indian-English term for aimlessly killing time.

Perhaps other avenues for Indian discontent direct it away from politics. In March riots broke out in Nagpur, a city of 3.5m in Maharashtra. The target was no one currently in power—it was the tomb of Aurangzeb, a 17th-century Muslim emperor who oppressed Hindus. But there is also a more optimistic explanation for the lack of protests: India’s obviously growing economy appears to foster a sense that better things really are on the way. A survey by the Centre for Monitoring Indian Economy, a data provider, asks Indians to rate their life satisfaction on a scale of one to ten. Although at the moment most plump for a score of four or five, they are more hopeful about the future. In five years’ time they expect a score of six or seven. It is easier to put up with anything, even the stresses and strains of life in a turbulent south Asian economy, if you don’t expect it to last for ever. ■

[american_desi]

Just now, 11MohanRedddy said:

What explains India’s peculiar stability?

In a tricky neighbourhood the country remains calm

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Finance & economics | Free exchange

What explains India’s peculiar stability?

In a tricky neighbourhood the country remains calm

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Illustration: Alvaro Bernis

Nov 6th 2025|5 min read

An economist with super-hero vision might stand in New Delhi, gaze in every direction and see turmoil. In Nepal, India’s neighbour to the north-east, “Gen Z” protests erupted earlier this year over inequality, as the scions of political dynasties flaunt their luxury holidays and designer clothes on Instagram while ordinary Nepalis struggle with unemployment. Further east, Bangladesh’s students led a revolution last year to overthrow Sheikh Hasina, who had been prime minister since 2009. Among their grievances was a quota system that reserved state jobs for descendants of war veterans. To India’s south, Sri Lankans stormed the presidential palace in 2022, forcing Gotabaya Rajapaksa, the president, to flee. Mr Rajapaksa had presided over an economic crisis that left the country bankrupt, with fuel and medicine running out. To the west, Pakistan faces protests by supporters of an imprisoned former prime minister and yet another IMF rescue.

Very simple.

1. One large single market .

2.Large country, hence able to better withstand natural calamities in different regions as resources from other regions can be used to support the region suffering natural calamitiy.

2. Country is built on Hindu principles of Tolerance. Live and let live

3. Civilian government controlls Army

 

[11MohanRedddy]

3 minutes ago, american_desi said:

Very simple.

1. One large single market .

2.Large country, hence able to better withstand natural calamities in different regions as resources from other regions can be used to support the region suffering natural calamitiy.

2. Country is built on Hindu principles of Tolerance. Live and let live

3. Civilian government controlls Army

 

I have a simpler answer anna. CIA is trying to make our Youth protest like in Nepal and Bangladesh. But our youth is busy fighting PK vs MB vs Prabhas fan wars, watching Tollywood re-release and big boss shows. Simple anna.

[11MohanRedddy]

 

 

[11MohanRedddy]

Isn't she the CM why is she protesting

 

 

[Android_Halwa]

My take : Politicians, who are usually not so well educated and affiliated to so many political ideologies, who if rated on a scale of skill will be rated poorly across all the kpi’s

But these same politicians keep the civil  uprisings in check. They have a niche skill which cannot be earned other wise  is crowd controlling and brain washing…