India is one of the fastest growing major economy in the world. Stealing the title of the slowing economy of China, this country has had an amazing journey to get to where it is today and with the right management it is very likely to become one of the world’s most powerful economy very soon. Not quite there yet. The total economy is still smaller in GDP terms than the economy of California. Over half of the native populations, nor works in agriculture and poverty is still very prevalent problem. Only open upload and throughout the past three decades it has seen unbelievable level of growth that has, among other things, hundreds of millions of people out of poverty. Completely understand how this country is going to get going. You must first understand where it has come from.
After over a century of servitude to the British under colonial rule and many, many decades of assertive efforts, India claimed its independence in August of 1947. This often sore a sharp downturn in economic prosperity because while colonists were oppressive, an undeniably exploitative called their host nations, they did ensure that they were able to effectively extract every bit of economic value they could from their colonies, India. It had lunch well from past lessons and actually ran a pretty effective economy once they were free from colonial rule. India developed a very protectionist economy. Protectionism is the policy of a nation to favour the goods produced by the nation over those produced abroad. Now all nations, to some extent will have a level of protectionism. This can be seen in things like tariffs charged on the important role materials or import quotas, limiting the amount of foreign cars that can enter a country that, given you the severity and extent of these policies, will determine how protectionist an economy is. A small side note is that this issue of protectionism has been in the news a lot recently with the US and Chinese trade war. This is ultimately a back and forth of protectionist policies that will work to favor the products of their respective local countries rather than the imports from abroad by artificially raising the prices of foreign goods. With these import taxes, countries will do this for many reasons. Primarily, it will be to protect their local industries and jobs from cheaper foreign competitors with lower wages. Sometimes it will just be political chess feeding. And sometimes it’s just another geopolitical negotiating strategy. In India’s case, though, it had a very different reason to adopt this protectionist policy. India had experienced first hand what colonialism and early global trade had meant for the countries on the bottom of the industrial ladder, it decided that instead of potentially subjecting another nation to the same kind of hardship did experience it would rather just do everything itself. The way to achieve this was through a series of five year plans which to regular channel viewers or savvy students of history sounds like the type of economic planning associated with a certain type of economic system. To top this off, India effectively nationalized most of its major industries in the mid 1950s and onwards, and its biggest trading partner at the time of the Soviet Union, and it had typical Soviet Esque style laws around pretty much everything called the license Raj, which was pretty much just a big book of bureaucratic red tape for anybody that wanted to do anything in the economy. So India was a communist country. Well no, it had a lot of central planning characteristics of the communist nation. I did trade with Communist Nations, but it really wasn’t a communist nation itself. India still supported free trade outside of its core industries of the nation. If you want to open a restaurant and turn a profit, you could. If you want to work your way up the corporate ladder, you could. So long as you are here to licensing Raj, which was easier said than done, you were in business. So it kind of was just a weird mix of both the worst of communism and the worst of capitalism. Be honest, India in the early years of the Cold War tried really, really hard to stay neutral. Eventually, though, it did actually lean more towards the Soviet Union and 1971 India and Soviet Union signed the windows Soviet Treaty of friendship and cooperation, which was just a very public way of saying that they would keep on trading in cooperating as they had been for the decades beforehand. This was all well and good, but the country really didn’t do that much economically. It grew in line with similar communist economies in the region and remain primarily agricultural with aside emphasis. On government run heavy industry, but this was all about the change.
Up until the 90s, the Soviet Union was India’s major trading partner. But then in 1991, the Soviet Union collapsed and with it India lost a majority of its trade and a large portion of its industrial support. 1991 was the slowest growth in the country had experienced since its independence. This was paired with a spike in oil prices that the growing economy relies so heavily on. All of this culminated in India facing the very real possibility of defaulting on its heavy debt burden. It found itself in in a last ditch effort to avoid the fates of economies in similar positions. At this time,Indian government reached out to the International Monetary Fund for a 1.8 billion dollar bailout loan. The International Monetary Fund is an international organisation that consists of 189 member country. And try to basically act as an intermediary to get everybody to do business with one another. It raises money by basically charging membership fees, two member states that will then use that money to lift up struggling economies like India in 1991. The International Monetary Fund is worth it for member states like the USA for example because it promotes global trade, monetary cooperation and sustainable economic growth. All things that are really important for a world power like the US. India, on the other hand, had up until this point shunned international trade, grasping onto their protectionist policies and state run enterprises. The International Monetary Fund agreed to loan India that money it so desperately needed. If India agreed to deregulate and open up its economy.
Since the agreement with the International Monetary Fund India has gone through a bold period of embracing free enterprise, it’s once government run industries have been prioritized. It’s very very strict. Trade policies have been relaxed, the country has opened itself up to business from around the world and the extremely limiting Licence Raj. That book of bureaucratic red tape that had rules about everything has since been thrown in the wood chipper. This was followed by an explosion in growth. India, the country has effectively doubled in size every five years since its turn around in 1991, which for a major economy is a growth rate that has only ever really been rivaled by nations like China and Japan, which is today the second and third largest economies in the world, respectively. These economic miracles are becoming more and more common around the world, though it has impacted large nations like the ones mentioned earlier. But many, many Eastern European and South East Asian countries seem to be going through these. Matthew industrial revolutions all together in a very short space of time.
Revolution took place in England and started around 1760. The process took many decades and the nation wasn’t really a fully industrialised nation until the mid 1800s. The technology of steam and water power eventually overflowed into other European economies that slowly started to go through their own industrial revolutions, changing from primarily agricultural nations to industrialise nations. These early European revolutions to many, many decades to fully get to the point where they could be considered an industrialised nation though. But recently this process has become a lot faster. China went from a primarily agricultural nation to primarily industrial nation and then onto a primarily server space nation. All in the span of about 20 years. Thailand did the same in around 5 years. The process of industrialization is getting faster and faster for every economy that goes through the transition. And here is why. Back in the 1760s when the first steam powered textile factories were spring into existence, these factories literally had to reinvent the wheel. The best layout for a factory floral. Best ways. Design everything from box to assembly lines was a little bit of unknown. This inevitably slowed down the whole process just a little bit. In today’s world we already have the knowledge and how all this industrial business should be done. So nations making the transition from agriculture to industry don’t have to reinvent the wheel. Oftentimes they can just buy machinery directly off established nations to carry out their business effectively from the get go. And this brings us neatly onto the second point. But world is now a large, interconnected global economy, with large businesses looking for new opportunities. As soon as a nation shows promising industrialising itself. International support tends to flock to these new nations in the form of multinational investment. Normally this takes the form of investment into industries can take advantage of cheaper Labour of developing countries, which one could argue four or against, but it does mean though is that these nations get the investment they need to hit the ground running as an industrialised nation. India is already a very very large economy simply by virtue of its resources at the main population. An favourable environmental conditions. The nation is already the 5th largest country in the world. As of late 2019 and it has achieved this ranking while still having a majority of its population. Working in agriculture. But this is all changing uncertainty and the rising cost of doing business in China is making the global business community look for a new base of its industrial operations for low cost manufacturing, India is the ideal according to take the reins right number of reasons and these same reasons are like India is likely behind the biggest and most rapid economic boom yet. India is a former British colony and while the country is much better off now as a free and independent state, it did take some of the best bits Britain had with it, namely its laws and its language. Language is actually normally seen as a pretty big hindrance to the economy because of the vast array of dialect spoken within the country that makes internal business. It’ll be difficult, but it does have going for it though is the second largest English speaking population in the world, falling only behind the USA?
English is the language of international trade and business population being able to speak English is a huge plus for when India bully sticks out onto the ball today. For reference, in China, less than 80% of the population speak English, which does create frictions in international business and could potentially just making the easier option in the future. Already India has benefited from this finding the world home of service call centres, the stereotypical Indian call centre is kind of thing that we make fun events. But to the Indian economy it means relatively good paying jobs that can be done by people of any age and industry. It is worth 10s of billions of dollars. This is just one small example of an industry that India has been able to monopolise that other industrialising nations would not have had the opportunity to be cause of their language barrier. The other big consideration is the Indian legal system. India does have its own system of government, although it is a system that basically reflects a western democracy. India has a president as the head of state and upper and lower House of governments to pass laws and a ranked court system. This again doesn’t sound like a huge deal but to international businesses shopping around for a new base of operations. This is huge to companies having a legal system similar to the western home countries, where trade dispute will be settled fairly. Business contracts will be honoured and intellectual property laws will be enforced is a very, very big deal and it is not something that multinationals have confidence in with countries like China. Now it must be noted that Indian law is not all roses and sunshine, it does have its problems with corruption but corruption tends to be something that international corporations can deal with as long as all that other stuff stays intact to protect them.
But what this all means is that India is likely on the cusp of an unbelievable technique that it is in the same position that I was 15 years ago. But it has a few big things going for it that China did not. If India is able to capitalise on the. And business attractiveness of the country. It is likely that the countries economy will continue to double in size many times over. This does not only mean that India will soon give China USA a run for their money, but on a smaller scale it will also mean that living conditions for hundreds of millions will be dragged up along with this economic explosion.