8. The Two Asian Paths of Prosperity and Stagnation: Japan and India

The chapter gives an overview of the recent state of the Japanese economy, and a snapshot of its “lost decades”: the fall in GDP growth and high unemployment coupled with a two-decade-long deflationary phase. The demographic factors also seem to be unfavourable, that have provided no real hope for a “demand driven recovery”. On the policy front, the chapter sheds light on the initiatives taken to rebuild and accommodate the macroeconomic shocks, and how effective those steps are. Though India, as an emerging economy, and Japan, as a developed one, are hardly comparable, the chapter attempts to overlay select Indian economic indicators on the Japanese equivalents. It shows that it was during the 1990s when India started to take off that the worst economic downturn in Japan’s history occurred with no recovery until very recently.