Business & Economics
Date: Monday , November 01, 1999
After independence, India focused on industrializing rapidly while safeguarding her poorest citizens. Well aware of her poverty, she embraced the socialist model that promised both progress and humanism. It delivered neither.
Economics has been one of the most disappointing aspects of the Indian century. Suffocated by protective tariffs and closed markets, India found itself poorer fifty years after independence than during the times of the British Raj. And - thanks to its enormous population - though its economy is the fifth largest in the world, with a Purchasing Power Parity (PPP) of roughly $1.5 trillion, per capita income is a dismal $270.
Socialist constraints and policies, such as the archaic license Raj, stifled India's natural culture of entrepreneurship. Rampant corruption and political bureaucracy consumed the nation's already few resources. In 1991, when the Soviet Union collapsed and socialism was discredited internationally as an economic philosophy - India worked to create a hospitable environment for foreign capital.
With cash reserves depleting at an alarming rate, Prime Minister Narasimha Rao and Finance Minister Manmohan Singh, in a bold move, threw the doors open, and the sunshine of international attention scattered the dust bunnies in the Indian market, which had gone subterranean for the last 40 years. The world realized that India, with its enormous stock of natural, human, and intellectual resources, had what it took to be a major player on the world market. Suddenly, the emerging Indian middle class of some 300 million consumers - the largest in the world - became alluring to American multinationals. Pepsi and McDonalds soon became a fixture in Indian cities along with other American corporations.
India is still a developing nation. There's a lot of ground to cover. But the success of its IT industry in a global environment has tremendously boosted its self-esteem. Bangalore and Hyderabad became the technological hubs of India. Texas Instruments and Hewlett Packard eagerly invested their cash and know how. Companies like Infosys, the first Indian corporation to be listed on the NASDAQ, offered American style stock options. Generally used for the offshore development of American products - and with no product of its own - the Indian software industry is still years behind its American counterpart. But a vision of the next Silicon Valley in India has taken form, and it's currently seeking funding.