Tales of India’s Economy Twistier than Kama Sutra

In 2006, Foreign Affairs, among many other periodicals, proclaimed India to be “a roaring capitalist success story.” This story, we are now increasingly told, is over. The rate of growth in India’s gross domestic product has slowed to slightly more than 6 percent from the peak of about 10 percent that once excited fantasies of India overtaking China. The rupee is plunging. Standard & Poor’s India’s credit-rating outlook to “negative” from “stable.” The next stage is “junk,” if it loses its BBB- grading.

Corruption and India’s threat of retroactive taxes on companies, most notably the government’s attempt to recoup as much as $3.72 billion from Vodafone Group Plc, the U.K.-based telecommunications company, on its 2007 acquisition of an Indian company are scaring away foreign investors. India’s own captains of industry are looking for abroad.