Is India going the Mexican way? Unlikely, although there is no dearth of doomsayers here or abroad. Whatever one may say about the speed or direction of the Indian economic reforms, there is no denying the fact that New Delhi did not plunge head-long into them. That in retrospect has turned out to be a bulwark against a Mexico-type situation developing here. For, India does not have full convertibility of rupee on capital account. Nor does it permit unrestricted imports of consumer and luxury goods at zero or very low rates of customs duty. Nor, for that matter, is India saddled with a massive current account deficit. But, above all, Indian economy had been insulated against the kind of crisis that hit Mexico second time in recent years by the flawed but solid infrastructural, industrial and agricultural base it had built painstakingly in the last five decades. With the benefit of hindsight, one can say that excessive controls against imports in the previous decades too have stood India in good stead. On the other hand, however it must be remembered that only Mexico could have relied upon the U.S. to bale it out of the economic mess it fond itself in recently.
God forbid, should India be hit by a crisis like Mexico's, the US or for that matter other western nations cannot be expected to exert themselves with the same speed and generosity as they have done in the case of that profligate nation.
