India needs to import more capital and export fewer workers

INDIA is still reporting world-beating economic growth, but is no longer getting any love for it. Flows of foreign money into the country have dried up, suggesting that outsiders believe that the reported gross domestic product growth rate of more than 8 per cent masks underlying weaknesses.

Most strikingly, corporate revenue normally grows (or shrinks) with the economy – in any country. But, last year, corporate revenue growth for listed companies in India decelerated to barely half the GDP growth rate. Rather than taking comfort in the headline real GDP figures, which are likely to be boosted by technical factors related to adjustments for inflation, policymakers would be wise to address some key fault lines.

Among the leading signs of weakness: India is losing more people and attracting a lot less money than it used to.