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India’s Economy Remains Robust Despite Global Downturn

Amid a global economic crisis, India's economy has managed to remain robust, fueling the growth of a large middle class. As Fred de Sam Lazaro reports, however, about 800 million residents in India still try to survive on less than $2 a day.

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  • JIM LEHRER:

    Next tonight: our India story, as Prime Minister Manmohan Singh arrives in an elaborate welcome. His nation's economy remains robust, despite the global recession and terrorist attacks.

    Special correspondent Fred de Sam Lazaro reports.

  • FRED DE SAM LAZARO:

    The Taj Hotel is almost fully back in business a year after the deadly siege that killed more than 150, including 22 foreigners, here and in other locations across Mumbai. The hotel is full most days even as workers complete the restoration.

    The Taj has long been a symbol of Indian business ambitions, dating back to British colonial days. This hotel was built in the early 1900s to accommodate Indian businessmen, who were often excluded from British-run establishments during the colonial days. Today, the Taj Hotel is a part of a larger global Tata conglomerate that now owns some of the most iconic of British brand names, Jaguar, Land Rover, and perhaps England's best-known tea company, Tetley's.

    Tata is a global $70 billion-a–year company, but it's also a barometer of a booming economy at home that's drawing record amounts of foreign investment. Another measure, Mumbai's stock market, is up more than 80 percent in the past 12 months.

    The furnaces of Tata Steel, the world's sixth largest steel-maker, are humming at full capacity says the division's CEO, Hemant Nerurkar.

  • HEMANT NERURKAR, CEO, Tata Steel:

    The steel demand growth is connected with growth in the GDP. And both are on the positive side in our country.

  • FRED DE SAM LAZARO:

    That demand comes up from stepped-up government spending on roads and bridges, also for housing and cars.

  • HEMANT NERURKAR:

    We have increased this year our production over last year by almost 22 to 25 percent. Our core strengths are in two sectors. One is automotive and the other is construction. The automotive industry this year has grown over 12 percent.

  • FRED DE SAM LAZARO:

    Tata helped spur that robust automotive demand when it announced its "People's Car" early last year, the $2,500 Nano.

    It's all a far cry from the decades after independence in 1947. India had a tightly regulated socialist economy. Markets were opened in the early '90s, but the pace of economic liberalization has been slowed by the give-and-take of India's chaotic democracy, a sharp contrast to China. That might well have been a blessing, insulating India when the global recession hit a year ago, says Vikas Bajaj, a Bombay-based reporter for The New York Times.

    VIKAS BAJAJ, "The New York Times": India was known as the country where it didn't have much of an export industry, which actually turns out to be a great thing, because now you're not dependent on the American and European markets. India didn't have a very well–developed financial system. People said that was bad. That was putting a check on Indian growth.

    And that's probably in part very true, but it also kept Indian banks and financial institutions away from a lot of the toxic stuff that was brewing in New York and London.

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