India
India is located in Southern Asia and has Bay of Bengal in East, Arabian Sea in West, Himalayas in the North, and Indian Ocean in the South. The population of India in 2016 reached 1.32 billion, making it the second most populous country in the world (Worldometers). Primary crops produced in India are rice, wheat, millets, maize, pulses, sugarcane, groundnut, tea, coffee, rubber, cotton, and jute. The top industries of India are textile, tourism, chemical, engineering & machinery, transportation, IT & ITES, banking & insurance, real estate, agriculture, and retail and wholesale (Rawat). The per capita income of India in FY 2015-16 reached Rs. 7769 per month. The majority of the population of India still comes under poor or low income category and only 5 percent comes in the middle, upper middle or high income categories (Venkataramakrishnan). India’s climate is tropical monsoon, which means with seasonal reversal of wind changes the temperature. In FY 2015-16, India’s budget deficit was 3.9 percent of GDP and current account deficit for Q4 of 2015 was USD 7.1 billion.
Political History
India got its independence from the British Empire on 15 August 1947, but it came at a cost of partition of India into two countries (India and Pakistan). Since, their independence India and Pakistan has been involved in several wars in 1948, 1965, 1971, and 1999. In addition, India also went to war with China in 1962. Since its independence, the Indian political scene has been dominated by the Congress Party, but lately there has been a surge in popularity and the majority in the Indian Parliament of nationalist party called the Bhartiya Janta Party. The Indian has been a democracy since its constitution was signed in 1950. Land reform started automatically after its independence in 1947. Indian politics has been dominated by the Nehru-Gandhi family as three members of the family have led the country Jawaharlal Nehru (1947-1964), Indira Gandhi (1966-1977 & 1980-1984) and Rajiv Gandhi (1984-89). Another Congress leader, P.V. Narasimha Rao (1991-1996) globalized Indian economy and Atal Bihari Vajpayee (1996 & 1998-2004) helped to modernize the country.
Economic History
Along with its independence, India faced great combination of troubles to its economy. The biggest problems were a lack of resources and widespread poverty. In 1950s, India decided to implement a mixed economy, attempting to balance the role of the state with that of the market. Positive FY for Indian economy were 1967-68, 1975-76, 1977-78, 1983-84, 1988-89, 1996-97, 1999-2000, 2003-04, 2005-08, 2009-11; as Indian economy grew at 8 percent or above. Negative FY for Indian economy were 1957-58, 1959-60, 1961-63, 1965-1967, 1968-69, 1971-73, 1974-75, 1976-77, 1979-80, 1991-92, and 2012-2014; as the economy experienced a sharp decline or the GDP growth was negative (First Post, 2014). Indian export successes has been minerals, stones, automobiles, nuclear products, chemicals, pharmaceuticals, cereals, cotton, iron, plastic, dairy, marine products, RMG, spices, rice, handicrafts, coal, etc. Some of the major projects in India that are well recognized all over the world are IGI Airport in Delhi, the Bandra-Worli Sea Link, Yamuna Expressway, Tehri Dam, etc.
Current State of Country and Challenges
Since the election of Prime Minister Narendra Modi in 2014, Indian economy has been experiencing continuous growth after declining growth prior his appointment. In 2015 and 2016, Indian GDP grew 7.3 percent and 7.9 percent. Also, India has become the prime destination for FDI in the world, after it has beat out China, U.S. and Mexico. The FDI is being used in several campaigns and policy changes of the current BJP government. Policy changes include boosting the agriculture industry, increasing investment in infrastructure, Make in India campaign to attract foreign operations, Skill India for teaching job skills, entrepreneurship programs, and many more. Current challenges for the Indian economy are to maintain economic growth, maintain relations with neighbours and overcome religious disputes.
The BJP government has focused on improving relations with all neighbours and has been working to improve diplomatic relations with the global superpowers. One of the biggest examples is India’s improving relationship with the United States of America and taking advantage of the slower economic growth in developed countries. By the end of March 2015, debt of central government stands at 47.1% of national GDP. In terms of economic value, India’s debt stands at Rs. 59.07 Lakh Crore and external debt stands at only 2.9 percent of the GDP (Economic Times). The current government is formed by a right-wing nationalistic party of India called BJP. The government has been focusing on economic development, stopping bureaucratic corruption, and uplifting the weaker sections of the society.
Reasons for Success
One of the most important factors of Indian economy growing in the last two years has been BJP’s increasing foreign direct investment and global diplomacy. Also, the BJP has also managed to stop the corruption that was an essential part of the previous government and used to be hindrance to the economic growth. The result has been increased GDP growth rate in FY 2014-15 and FY 2015-16. In addition, the inflation rate has been reduced from 9.4 percent to 4.9 percent and industrial production growth has also increased. Other policies and measures that are influential in making changes to the economy are Jan Dhan, Swachh Bharat, LPG subsidy, real estate regulation, diesel deregulations, etc.
There have been other measures that have been very popular are direct subsidy payments, bank accounts for poorest, LPG subsidy, media management, coal auctions and telecom auctions to reduce corruption (Bellman). These reasons have played a major role in ensuring Indian economy faces the positive rise and reforms of the current government has a major role in improving Indian economy. There are some causes of concerns as communal riots that are historically common to India have also taken place. One such instance that has tainted the country has been the murder of a Muslim man in Dadri for eating Beef, which the government is planning to ban due to religious reasons (Chatterjee).
Recommendation
India needs to keep selling its growing economy and internal security as an asset to foreign investors. As most developed countries are going through a period where their economic growth has stabilized, India is one of the economies that is facing sharp increase in its economic growth rate and it is one the most attractive aspects for investors. The government has managed to stir confidence in the economy and create a feeling of nationalism among masses by its pro-India policies. It is important that such mood is maintained in the country and the majority of the population supports the growth platform laid ahead for coming years.
Another important measure would be making sure the already tainted reputation of Congress is further reduced as hatred for the party increases significantly among the masses due to the corruption scandals. Under BJP one of the main successes has been corruption free governance and it is important that good governance is maintained in the coming years. There have been several promises made by the BJP government, especially related to terrorism and the government needs to deliver on those promises. The government also needs to make sure that foreign investments in the country are maintained as India is looking to build its economy of China model of FDI and developing domestic manufacturing industry.
Changes in Behaviour
Outside governments, especially G8 countries and Pakistan have a major role to play in the future success of India. Already, G8 countries have invested Billions of dollars in the Indian economy as it is seen as the most lucrative emerging market. Among G8 countries, China does not have great diplomatic relations with India and it is a matter of concern as they regularly oppose India and its entry into the list of UN permanent members and the Nuclear Suppliers Group and hinder the growth of Indian exports and foreign relations. Pakistan is another country that will play a major role in the future success of India, as majority of India’s security threats come from Pakistan infused terrorism.
India is expecting several multinational corporations to shift their production to India. The Make in India campaign of the current government is focusing on bringing production processes into India by offering subsidies and suitable working environment for multinational corporations. Also, the cheap labour in India is being used as an attraction tool for multinational corporations to start their production in India. There have been plans to set up Smart cities and Special Economic Zones to ensure that multinational corporations are attracted to start their operations in India. Also, it is important that jobs are created in India by setting up production processes.
Future Prediction
Above all, in the coming decade, it is vital that India is led by the visionary leadership of Narendra Modi. The current failure of other parties to compete with the BJP and the popularity of BJP is almost making sure that BJP government will retain its leadership in the Indian Parliament. The results of the current reforms and policies that have been implemented by the BJP government would start displaying its results in the coming decade. The corruption less governance of BJP would help the Indian economy to become of the largest and fastest growing economies in the world. It is possible that India might become the third largest economy in the world in the next decade, if everything goes to plan.
There will be other improvements in India as middle class will strengthen and unemployment rate will decline. The current reforms would improve the agricultural sector and India would become a net exporter. India will become a manufacturing hub as several corporations will produce in India. Another expectation is that missions such as Swachh Bharat will start displaying its results and Indians cities will be cleaner than ever before. It is also possible that several Smart cities will open all over India. Security will ensure that the tourism industry will experience an increase in the footfall. It is expected that the current government will help to boost Indian economy and help India reach its true potential as one of the economic superpowers in the world.
Works Cited
Bellman., Eric. The Top 10 Successes of Narendra Modi’s First Year. The Wall Street Journal. wsj.com. 26 May 2015. Web. 13 June 2016.
Chatterjee., Rituparna. Dadri Beef Rumour: Hindu Mob Lynches Muslim Man Suspected Of Killing And Eating A Cow. The Huffington Post. huffingtonpost.in. 30 September 2015. Web. 11 June 2016.
Rawat., Deeksha. Top 10 Industries that Contribute to Indian Economy. List Dose. listdose.com. 20 March 2014. Web. 12 June 2016.
Team Firstbiz. From 1947 to 2014: How the Indian economy has changed since independence. First Post. firstpost.com. 15 August 2014. Web. 11 June 2016.
The Economic Times. India's debt position remains comfortable, says FM Arun Jaitley. The Economic Times. .economictimes.indiatimes.com. 4 February 2016. Web. 11 June 2016.
Venkataramakrishnan., Rohan., Everyone in India thinks they are 'middle class' and almost no one actually is. Scroll India. Scroll.in. 10 July 2015. Web. 11 June 2016.
Worldometers. India Population (LIVE). Worldometers. Worldometers.info. 2016. Web. 12 June 2016.
