India’s 9% Growth Is A Crisis In Slow Motion

India’s 9% Growth Is A Crisis In Slow Motion

Narendra Modi's cozying up to Vladimir Putin might score in the short run, but it could damage ... [+] India's global standing in the longer run. Listening to Indian officials explain how they plan to cap a surging debt load, it's hard not to be transported back to the Japan of 20 years ago. The basic—and failed—strategy of then-Japanese Prime Minister Junichiro Koizumi is precisely the one current Indian Narendra Modi is embracing: growing the economy's way out of debt. How did that ploy work out for Tokyo? Dismally. In 2001, when Koizumi rose to the premiership, Japan's ratio of debt to gross domestic product was 104%. At the time, Koizumi spelled out an ambitious plan to curtail public-works spending, the ultimate political boondoggle. Koizumi proposed a roughly 27% cut in wasteful construction aimed more about juicing GDP than improving Japan's already world-class infrastructure over five years. Such efforts explain why, to this day, Koizumi stands out as the most important Japanese economic disruptor in decades. With his "no reform without sacred cows" mantra, Koizumi engineered the privatization of the sprawling Japan Post, which included the world's biggest savings bank with trillions of dollars in assets. It was pork-barrel central,