Professional Documents
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Urvi Vadagama
Devry University
Course: INTL-500
1. What kind of economic system did India operate under during 1947–1990? What kind of
system is it moving toward today? What are the impediments to completing this
transformation?
Indian economy is the world's twelfth largest according to market exchange rates.
From 1947 to 1990, India operated under a mixed economy that included several large state
owned enterprises, central planning , and subsidies. From 1947 to 1991, India Economy system
was based on Social democratic based policies. Today, the country is moving towards a market
economy. Already a number of economic reforms have been implemented allowing for more
privatization of key industries and attracting more foreign investment. India became the second
fastest growing major economy in the world by 2008. However, tariffs are still high and efforts
to lower them are meeting with opposition from companies that fear lower tariffs will bring in
too much competition. Antiquated labor and manufacturing laws are also making it difficult for
regulations have affected (i) the efficiency of state and private businesses and (ii) the rate
of new business formation in India during the 1947–1990 time frame? How do you think
these factors affected the rate of economic growth in India during this time frame?
Regulations also called administrative laws or rules, are the primary vehicles by
which the federal government implement laws and agency objectives. The impact of widespread
public ownership of businesses and extensive government regulation on the efficiency of state
CRITICAL THINKING:-INDIAN ECONOMIC TRANSFORMATION
and private business and the rate of new business formation in India during 1947-1990 time
Late in getting permission for establishing new business for new product for private
enterprises
Heavy industries revered for the state owned enterprises by a larger share
The issues identified above lead us to major factors that affected growth
rate of Indian economy during the time period. First and most important factors is the
permission to diversify into a new product and thus to a new sector of business with new
job vacancies. Late permission might result in longer unemployment and hence lessened
the economical growth rate. Although labor laws made it difficult to fire employees but
this law did not create any scope for new employment .
unemployment people could not contribute to their families, financial condition of lower-
3. How would privatization, deregulation, and the removal of the barriers to foreign direct
investment affect the efficiency of business, new business formation, and the rate of
Since 1990, India has been much more open to foreign investment, and
to the market - competition that forces firms to become more efficient. Foreign
investment in the county is up from just $150 million in 1991 to $36.7 billion in 2007,
and the overall economy has grown at a much quicker rate. Growth rates from 1994-2004
were about 6.3 per year, but about 9 percent per year from 2005-2008.
4. India now has pockets of strengths in key high-technology industries such as software
and pharmaceuticals. Why do you think India is developing strength in these areas? How
might success in these industries help generate growth in the other sectors of the Indian
economy?
developing strength in the key of high technology industries such as software and
pharmaceutical since they have such a large amount of resources and inexpensive labor.
The country has emerged as a vibrant global center for software development, and
India's pharmaceuticals companies have taken a strong global position by selling low cost
of patent in the developed world. In India, great potential exists for increasing
productivity by shifting labor from low productivity and subsistence activities to more
industries continue to prosper, other sectors of the economy should also see the benefit of
spillover effects. Success in these industries will help generate growth in other areas of
revenue from the taxes from the telecommunications and pharmaceutical industries are
CRITICAL THINKING:-INDIAN ECONOMIC TRANSFORMATION
helping to develop all other areas of the Indian economy. These industries are high
rollers. The pharmaceuticals that are just off patent can be produced at a much lower cost
5. Given what is now occurring in the Indian economy, do you think the country represents
products? Why?
$150 million in 1990 to $15.5 billion in 2007. However whether India is an attractive
Certainly, the large population will serve to attract some companies, but the fact that
some 40 percent of population is living in object poverty will scare other companies
away. Moreover, it is still not easy to run a company in India thanks to laws limiting
everything from who can be fired to who can manufacture certain products.
CRITICAL THINKING:-INDIAN ECONOMIC TRANSFORMATION
References:
https://business.mapsofindia.com/india-economy/system.html
https://www.ced.org/reports/regulation-and-the-economy
http://www.tutor2u.net/economics/reference/india-economic-growth-and-
development
http://www.ibef.org/industry/services.aspx
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