[Business Today]

Published date: 29th May 2011

In Greek mythology, the Minotaur was a creature with a bull’s head and a man’s body who dwelt at the centre of the Cretan maze or labyrinth. Theseus killed the monster, but forgot to put up a white sail to signal his victory when he returned to Athens, and his distraught father Aegeus committed suicide.

India’s inflation fight is nearly as fraught; our finance minister and central bank governor must make sure it does not end up as Greek tragedy. Pranab Mukherjee, who was attending the annual meeting of the Asian Development Bank in Hanoi in early May, admitted that inflation could knock half a percentage point off his growth projections for 2011/12. So our stock markets are stumbling, and profit margins are being squeezed by inflation and rising interest rates. You don’t hear the word “overheating” much in India, but that is precisely what is happening. In this season of mangoes, the aam admi is getting clobbered.

The only consolation, if any, is that inflation is raging across the world, and especially in Asia-the Philippines, Bangladesh, Pakistan, Australia, Singapore, New Zealand, Vietnam, South Korea, and China. But commodity prices finally seem to be pulling back from an inexorable bull run, the dollar may have started a slow climb from its nadir, and oil prices paused in their race skywards.

“Moderating growth”. Now that is a phrase that US President Jimmy Carter’s “inflation czar” Alfred Kahn would have loved. Kahn likened his title to oxymorons like “jumbo shrimp”, “military intelligence” and “airline food”.

But be of reasonable cheer. Economics is as much the bittersweet science of looking back at history as the delicious art of looking forward at the future. The day this magazine went to press, the ADB released a report titled “Asia 2050: Realising the Asian Century”. It said Asia would account for 51 per cent of global GDP, regaining the dominant economic position it held 250 years ago: per capita income would rise six-fold; and three billion more Asians would become affluent by today’s standards. China and India, it said, run the risk of falling into the “Middle Income Trap” due to a number of economic, political and social challenges. But first India has to defeat inflation, and RBI Governor Duvvuri Subbarao is clearly near tether’s end after raising interest rates nine times in 14 months. Read Puja Mehra’s interview with him on page 28.

Although we at Business Today could say “we told you so” and remind you of our “India Slowing” cover (February 20), we are also incorrigibly optimistic. So Kushan Mitra, who travelled to Africa last month, writes this cover story on a continent pregnant with promise for Corporate India. “Your time to shine, don’t wait in line” and much else in Waka Waka, the song immortalised by Shakira, could be an anthem for Indian business. As Mitra notes, the size of the opportunity in Africa is huge-53 countries, over a billion people, and GDP projected at $2.6 trillion by 2020. Africa is the moshpit where India and China are facing off over resources, infrastructure and markets, and the drumbeat rolling out across the veldt is mesmerising. Read all about it starting on page 50.