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Asia

Corruption and inflation clouded the Indian growth story in 2010

As 2010 winds to a close, corruption scandals have weakened the political clout of India's ruling United Progressive Alliance (UPA) and domestic inflation has clouded the Indian growth story.

Some athletes pulled out of the badly prepared Commonwealth Games in Delhi

Some athletes pulled out of the badly prepared Commonwealth Games in Delhi

A series of corruption scandals which broke in 2010 look set to dominate Indian business and politics in 2011. Chief among them is an alleged scam in the telecoms sector that a government auditor said may have cost India up to 39 billion dollars.

A year that began well was tainted by other scandals including the Commonwealth Games preparations and the irregular allocation of apartments in a Mumbai elite housing society.

A pedestrian bridge collapsed before the Commonwealth Games, injuring over 25 people

A pedestrian bridge collapsed before the Commonwealth Games, injuring over 25 people

Endemic corruption

Sociologist Dipankar Gupta said Prime Minister Manmohan Singh’s second tenure in office has been disappointing because, "There is corruption in every sphere of public life which only shows that UPA-2 hasn’t really done anything systemic to change things around. In fact it has covered up and perhaps even covertly encouraged certain people to indulge in their brand of corruption and that is very disappointing."

India’s diplomatic run in 2010 saw significant advances in relations with all the great powers. The second half of the year saw visits from the leaders of all five permanent members of the UN Security Council — the United States, China, Russia, France, and Britain. Prime Minister Manmohan Singh also travelled to Tokyo and Brussels for the annual summits with Japan and the European Union.

India will have to shoulder greater responsibilities

US President Barack Obama also visited India this year

US President Barack Obama also visited India this year

But international relations expert Amitabh Mattoo said India will have to shoulder greater responsibilities with this international recognition.

"2010 was a year in which India’s importance was recognized but it also offered a reality check about the way in which the international system and international politics is moving," Mattoo told Deutsche Welle. "The rise of China and its aggressive behavior with India in the past few months offered a corrective that this is not going to be an easy world that we are living in and that with the emergence of India also come greater responsibilities, greater challenges."

Relations with Pakistan stayed turbulent and though officials and leaders of the two countries met in Islamabad in July to discuss the revival of the peace process, it ended without any breakthrough.

High inflation

On the economic front, the year's first three quarters with over 8 percent growth marked a revival of the Indian economy, but the year also ends on a bitter note due to high inflation and gridlock regarding key reforms.

Inflation drove up food prices in 2010

Inflation drove up food prices in 2010

Prices of vegetables, fruits and protein-based products like milk, eggs, fish and meat registered a steep hike hurting those living below the poverty line.

Economic analyst M.K Venu said this could spell trouble for India’s political economy. "India's GDP may be growing at 8.7 percent but one big concern for the government is that for more than 50 percent of the country’s population, their consumption basket is dominated by food and energy. And food and energy prices are not coming down. Food inflation is well above 10 percent. Global oil prices are on the way up and this is going to cause a serious disruption in India’s political economy going forward."

Thus it was a mixed year for India in 2010 with many observers registering diplomatic pluses against domestic minuses.

Author: Murali Krishnan (New Delhi)
Editor: Sarah Berning

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