Great post by Sri N^3. However, as is moi wont, some nitpicks.
Zooming land values paid initially with NRI-inflow cash, then with Arab petro-cash, then exploding due to Indians going deep into large debt, courtesy of freer and cheaper credit, based in turn on the certainty of land appreciation. The US Mortgage Bubble, magnified a thousand times. This gave a rocket boost to economic activity as the Indian Middle Class changed from scrimping and saving to put into Arab gold around their daughters' necks, to becoming free spenders living off land appreciation.
Would mostly agree except that the US situ is not toto comparable with Desh's. IN Desh, Land is still something they don't make anymore of, so land price appreciation in real terms is not a loony assumption. Further, the nominal inflation rate in Desh has been regularly clocking 6-7%+ on the CPI front (and probably a few 100 basis points more in the asset markets), hence nominal value appreciation is another given, more or less.
Put 2 and 2 together and we have some reasonable grounds to believe our realty crashdown to reality won't be nearly as dramatic (and traumatic) as that in the khanate. We'll suffer multiple soft, small bubble bursts rather than a volcano burst as happened Dec'07 onwards in the khanlands. Recovery and rejuvenation after small bubble pops==much easier, manageable and non-governmental than the aftermath of a volcano burst, IMHO.
All of these have outpaced Quality of Life development, such as good poo-poo-places, roads, water quality, air quality, electric supply, and green areas. The clock is ticking. Without swift and major cleanup, wealth can leave India a lot faster than it came in. May be happening already with the Dubai bust, which has dampened construction, maybe to be followed by a real estate crash as the debt becomes unsustainable by property appreciation.
400% agree. Its not as if pre-liberalisation these things were plentiful but post-'91 the allocation of new investment veered further away from these essentials.
Other nations are quick to learn a lot of things from India, in terms of efficiency in cutting down per capita allocations of living space and convenience. So pretty soon, there will be hajaar other places that are better places to invest, unless India cleans up.
Philippines already doing a Banglore on Yindia in the lucrative (voice) BPO space.
But overall, the era where phoren capital did us favors by coming here may well be passing. Things have changed in this decade. The FRBM Act (2003) - the NDA sarkar's single-most important contribution to nation-building - ensured that in a few yrs (by 2005-06) the domestic savings rate had breached the 25% mark (it now exceeds 30%) and coupled with a historically better ROCE than PRC (we take some 4% of savings to generate 1% GDP growth compared to PRC's 5% average), Desh now generates most of the capital required for investment internally. Sure, we could always do with more and hence the specter of all our pujya mantris pulling out begging bowls and whine-fests at first opportunity on foreign shores.
Bottomline: - we're not as totally and desperately dependent on FDI as desis often like to think.
Overall, can't agree more than Desh better cleanup its act in its own interest, not merely because the west is holding a gun to our collective heads.
Jai Ho.