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Indian Business Environment
4/4/2011 SIMC - BENGALURU Nishant Nirupam / Roll No: 230
INDIAN ECONOMY (POST-LIBERALIZATION) The Dark Age The political scenario of northern India after the extinction of Kushanas and the Andhras til the ascendancy of the imperial Guptas was chaotic and lawless. informed yet ignorant. From these Dark Ages to the present day Digital Age. This did not do anything good to the economic condition of the country and as such the standard of living did not go up. we have come a long way. also aggravated the problem. The imports started exceeding the exports and the India suffered huge balance of payment problems. The fall of the Soviet Union. Effort was also put to increase the condition of the GDP of the country and to increase exports. it did not find much support and the country remained in its backward economic state. Post-Independence Scenario To start with. The current scenario is that of a global village in true sense because of technological advancement. The IMF asked the country for the bailout loan. plenty of restrictions were abolished on a number of sectors and the regulations on pricing were also put off. During his tenure. a main overseas business market of India. India economic approach was mainly based on government control and a centrally operated market. 1980 s In the 1980s. Even when the economic liberalization policies were undertaken. from independence till the later part of the 1980s. connected yet isolated. . The country did not have a proper consumer oriented market and foreign investments were also not coming in. Never before in the history of mankind have ordinary human beings felt so much empowered yet helpless. The country at this stage was in need of an immediate economic reform. stress was given on globalization by the Congress government under Rajiv Gandhi. This was one of the darkest periods in Indian History and has rightly been termed as the Dark Age .
Sensing the opportunity. Today. Today. who was the Finance Minister of India under the Congress government headed by P. the rate of employment is also increasing considerably. This is perhaps the milestone in the economic growth of India and it aimed towards welcoming globalization. industrial sectors and the agriculture sector have really grown to a great extent.. The market got flooded with western goods like branded clothes. The Indian customers (especially youth) felt excited at the prospects that now they can ape the west but the realization of less disposable income at their end still kept them at a distance from those glamorous malls. Today. Since. watches. the liberalization plan. textiles.V. private banks mushroomed in the cities offering various credit card options and promoting the western culture of Buy now. mobile phones and satellite channels with MTV connection. Pay later . cement industry and so on. shoes. With the increase in the supply level. It created job opportunities in abundance for the non-technical. Liberalization has also made a positive impact on various important economic segments. the economic condition gradually started improving and today India is one of the fastest growing economies in the world with an average yearly growth rate of around 6-7%. the first initiation towards economic liberalization was undertaken by Dr. retail and direct marketing. The Impact of Liberalization Liberalization has greatly influenced the Indian economy and made it a huge consumer market. Liberalization also led to economic growth. the Indian market was expected to grow at around 8% in the year 2010. Manmohan Singh. the service sectors. toiletries. Around 54% of the annual Gross Domestic Product (GDP) of India comes from the service industry while the industrial and agriculture sector contributes around 29% and 17% respectively. The change that followed. most of the economic changes in the country are based on the demand supply cycle and other economic factors. English speaking graduates in the areas like call centre. more and more new sectors are coming up and reaping profits such as IT services. In India. India is the world s 12th largest economy in terms of market exchange rate and 4th largest in terms of the Purchasing Power Parity. It also created opportunities for skilled professionals in the electronic media and the IT sector. in the same year. With the improvement of the market.Liberalization In the third world countries the process of globalization (dictated by World Bank and the international monetary fund) started in 1990. . chemical. Narasimha Rao. According to a report by the World Bank.
We must know that for the sustainable socioeconomic growth of nation.64%.5 billion from US$ 25. boom and has given rise to some world class Indian companies like Infosys. Foreign Direct Investment One of the main aspects of globalization is foreign investment. The Brand India is taking off. The amount of FDI Equity Inflows was 77. textiles. be that language. There has been an improvement in the manufacturing sector as well which grew from 8. culture or product. According to NASSCOM. The Foreign Institutional Investments (FII) amounts to around US$ 10 billion in FY 2008-09. the Indian software and services industry showed a growth of 16 percent and log revenues of $60 billion despite the global slowdown. India is one of the well known industrial markets in the Asia-Pacific region. There is absolutely no concern and sensitivity for the rural India which is the backbone of Indian economy and society. India today has emerged as one of the perfect markets for foreign investors due to its vast market base.1 billion ( 2008). software exports are estimated to register a growth of 13-14% in the financial year 201011. The market watchers says that India was ranked at the second place in global foreign direct investments in 2010. tea.The Rapid Growth The I.98% in 2005 to around 12% in 2010. software packages and above all intellectual manpower from the world class institutions like IIT. We have developed the tendency of loathing Indian made products on the pretext of inferior quality. We simply have no liking for the Made in India label though the fact is that we are exporting some of the best quality finished goods like diamonds. IIM. Flamboyance is fine. IIS and AIIMS. But where are we l osing? The irony is that brand India is losing where it should hold it tight and firm. while the rate of Foreign direct investments (FDI) has grown around 85.1% in 2009 to US$ 46.8 % which will rise more in the future. which is a great sign. . More and more foreign companies are investing in the Indian market to get more returns. ISB. The condition is expected to improve further with more demand and increase in customer base. rice.902 crores till the end of January 2011 (for the FY 2010-11). but we can t keep ourselves in a state of illusion on the basis of flamboyance and economic prosperity.T. The communication segment has grown up to around 16. The yearly growth of the industrial sector has been around 6. Indians are getting obsessed with anything western. it is extremely imperative that every individual takes a walk towards the path of economic prosperity and social development. Even during the time of recession. Wipro and Tata Consulting Services .
flyovers and other improved public services. it only takes few days to bring it down through the methods of serious explosion here and there. When this happens at mass level it creates law and order problem for the administration. In an atmosphere of fear. Urban unemployment will rise. it will work as an impediment in the national growth. rapid ruralisation is taking place in villages due to lack of basic amenities. Investment doesn t take place . On the contrary. automobiles. Lack of rural development will lead to unprecedented rise in urban population and this will lead to inflated real estate prices. Unemployment gives way to frustration and if not handled properly leads to crime. People there still live in dark ages and practice ancient traditions due to ignorance. At one level there is rapid urbanization going on in cities like introduction of malls. Although it takes years to build a prosperous and investor friendly economy. Development for few among many is a very fragile way of development for any nation .As of now India is moving in two directions. amphitheatres. Conclusion This is certainly not a good sign because if rural development doesn t become a priority for government and concerned citizen. coffee shops.
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