INDIA AND JAPAN

RIDING IN THE LAND OF ‘RISING YEN’

Ajay Dua

The Economic Times, October 24, 2010

A promise which both the Indian and Japanese governments have kept since 2004 is to have annual summit-meetings. Starting Sunday, Dr Manmohan Singh sets out on his fourth visit as PM to Japan. Perhaps there is no other country which he has visited more often or with whose head, he has had as many as seven structured meetings.

It is a different matter that in each of his trips, he has to deal with a different Japanese Prime Minister.

Regular engagement with a country, till very recently the world’s second largest economy, is warranted despite all the economic and political problems Japan has been facing of late. Its cup of woes seems full with problems like a shrinking work force, mounting public debt and prospects of a prolonged deflation.

But most Japan-watchers agree that it also has the potential to start growing once again, given its high domestic savings, a well diversified $5 trillion economy—3.5 times the Indian GDP, and a huge current account surplus. It is currently the only Asian country having excess capacity, causing many to believe that its best days are yet to come.

In line with our ‘Look East Policy’, we have rightly upgraded our relationship with Japan to a strategic partnership. For years now, Japan has been our highest official aid-giver.

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