Author: swaminathan
S. Anklesaria Aiyar Source: Cato (Cato
Institute)
In 1991, India fell into a financial dilemma and urgently sought help from the International Monetary Fund (IMF).At that time, India was famous for seeking foreign aid and food assistance in the world (or infamous).In the 30 years after independence in 1947, the efforts to promote economic development through self -sufficiency, socialist plan and public sector led, only 3.5%of GDP growth was achieved each year, only half of the four Asian four dragons.
The five -year plan not only guides public investment, but also guides private investment.Any production, import, technical cooperation or obtaining foreign exchange requires government permission.Industrial capacity is limited to the scope of domestic needs, and has created small factories that lack a large -scale economy.More than 800 industrial products have been retained for small industrial production.The government has banks, insurance companies and other regular loan institutions.
During the peak of the socialist stage in the 1970s, India’s highest income tax rate was 97.75%, and it was equipped with a wealth tax of 3.5%.Indian Prime Minister INDIRA
The slogan of gandhi) is "Garibi Hatao", which means "eliminating poverty".Actually it turned over.Since the 1980s, it has gradually relaxed economic control. Although this has promoted faster GDP growth and a certain degree of poverty reduction, it relies on large -scale and unsustainable fiscal deficits.Foreign debts accumulated like mountains, and India fell into a financial difficulties in 1991.Obviously a new policy is needed.After the disintegration of the Soviet Union, the Indian government shifted from self -sufficiency to globalization, led from the public sector to the economy driven by the private sector.
The opposition party condemned these policies that the World Bank and the International Monetary Fund were imposed to India, and they vowed to overthrow these policies after coming to power.However, the growth of GDP is so fast that even the governments of all different political factions have maintained the same economic development direction.After 2003, the cumulative impact of years of reform and globalization made India’s average annual growth of more than 7%, becoming a "miracle" economy.
Per capita income rose from $ 304 in 1991 to $ 2,600 in 2023.Calculated by purchasing power, India’s GDP is now second only to India and the United States, third in the world.A decline in poverty rate, a job paper organized by the International Monetary Fund shows that the ratio of the extreme poverty in India (the World Bank defines extreme poverty as a proportion of the daily cost of less than $ 2.15 in 2017) below 1%.India has changed from the largest foreign aid to the country to an important donation country, and it has become a big economic country worthy of attention.
India accounted for 2%of the world exports when independence in 1947.At that time, the leaders believed that globalization meant colonial rule, and they sought self -sufficiency to obtain the economic independence they thought to support political independence.By 1986, the self -sufficient policy made India a 0.45%share of global exports, but this was regarded as a achievement rather than a disaster.By 1991, the import tariffs on some commodities exceeded 300%, and many products were prohibited from importing.
Economic reform gradually reduced import tariffs from more than 300%in 1991 to 12%of the FY 2010-2011 (Figure 1), which quickly lifted the restrictions on investment and import of private sector.The pessimist predicts that the open economy will lead to surge in imports and long -term international revenue and expenditure crises.However, India has achieved vigorous development: the proportion of foreign trade accounts for GDP has risen from 8.5%in 1965 to 17%in 1991, and then soared to 49.4%in 2022 (Figure 2); India’s regular account deficit is stillControlled, even in the Asian financial crisis in 1998 or the Great recession in 2008, India does not need assistance from the International Monetary Fund. Foreign exchange reserves have rarely increased from 1991 to US $ 580 billion in mid -2023.In 2023, India is a stable aidone, and neighboring countries including Pakistan, Sri Lanka and Bangladesh are seeking assistance from the International Monetary Fund.
It is worth noting that India has become a major service exporter.From a historical point of view, countries have gradually developed from commodity exporters, gradually developing into a manufactured exporter, and eventually realized service exports.However, due to the restrictions and backward infrastructure of labor policy, India has never realized its potential to achieve its low -cost labor -intensive product manufacturers like the four Asian dragons, but India surpasses the general development stage and directly becomes a service exporter.EssenceThe call center and computer software that began in the late 1990s, and then rose rapidly on the value chain.In fiscal year 2022-2023 (from April 2022 to March 2023), India’s service exports increased more than 27%to $ 325 billion, while the export of goods increased by only 5%to $ 452 billion (Figure 3).Service exports are expected to surpass product exports in the next few years.At present, India accounts for only 1.5%of global goods exports, but accounts for 4.1%of global service exports.India’s top software exporters, Infosys, Tata Consulting Services (TCS), Cognizant -is world -renowned.
The global capacity center of multinational companies has become the main service exporter.A report from the Indian National Software and Service Enterprise Association (NASSCOM) and Deloitte, it is estimated that 1,430 multinational companies have established these capacity centers in India in 2021. It was originally a low -tech logistics work, and then software. Now it is getting more and more.High value -added work, such as engineering services and research and development.In 2021, the turnover of these capacity centers in India reached 36 billion U.S. dollars and hired 1.38 million employees, of which 42%were engaged in R & D work.Accenture, the world’s largest information technology consulting company, has 700,000 employees worldwide, of which 300,000 are in India.More than 40%of the Global Capability Center is located in India. Through these centers, the internal trade of multinational companies has become international trade among the country.
India’s first Prime Minister Jawaharlal NEHRU hopes to establish a dominant public sector.In his 1956 industrial policy resolution, he promised that India would pursue a socialist model and retain 17 economic fields to the public sector.His daughter InDira Gandhi inherited his socialist thought and became Indian Prime Minister in 1967. She nationalized the banks, coal, copper, and comprehensive insurance.The import and exports of thousands of items in India must be carried out through the trading company of the public sector.Based on global standards, India’s private enterprises are still relatively small, and they have rarely allowed foreign investment.
After 1980, the limited liberalization relaxed the strictest control, but the real liberalization had to wait until the reform of 1991 -ending the era of industry and import permits, and the rupee can be freely exchanged on regular accounts.Critics claim that globalization means that Indian companies will be crushed by multinational companies or reduced to vassals of multinational companies.However, foreign investment is gradually allowed, especially in the field of cars and telecommunications.Almost all multinational car companies have entered the country with the largest population in the world in the 21st century, but many companies including GM, Ford, Chrysler, Fiat and Peugeot have struggled for more than ten years to achieve profitability, and then withdrew from exitEssenceSuzuki and Hyundai became the leader of foreign brands. Tata Automobile and Mahindra, two Indian companies, have become competitive manufacturers and exporters.By the beginning of the 21st century, India became the main exporter of cars, pedal cars, motorcycles and car parts.
Most Indian political parties strongly oppose the new patent rules issued by the World Trade Organization (WTO) in 2015.Indian Pharmaceuticals has begun to produce western patented drugs with reverse engineering, and they are worried that the new patent system will let it go bankrupt.In fact, the rules of WTO created a huge global market for generic drugs. Indian companies quickly became one of the world’s largest participants, and they now account for 40%of the US generic drug market.
Indeed, some Indian companies were defeated by the competition of foreign companies, but other Indian companies became multinational companies with their own strength: Mitar Group acquired Arcelor in France, becoming the world’s largest steel company; TattaThe group acquired British Corus and Jaguar, becoming the largest employer of private business in the UK.
India’s most unexpected success is in the field of computer software and other business services.India’s software exports began to accelerate the development in the 1990s. It was precisely because of so many US work to Outsourcing in India’s largest software city Bangalore.In fiscal 2022-2023, India’s information technology industry created 5.4 billion jobs and $ 194 billion in exports.
Prior to 2010, most of the foreign direct investment in India’s industries was relatively sluggish. In 1991, it was a trivial $ 70 million, but by fiscal 2021-2022, it rose to $ 83.57 billion (3.1%of GDP).With the deterioration of the relationship between India and Western countries, some multinational companies have recently evacuated India, and India has become beneficiaries.The most typical example is Apple. The company produced $ 7 billion iPhone in India in fiscal 2022-2023, of which $ 5 billion was exported.Apple plans to achieve a $ 20 billion income by 2025, and many of its component manufacturers will also expand rapidly in India.
Most Fortune 500 companies enter India through global capacity centers rather than factories.Many Indians who work in these centers start their own business after leaving.Therefore, the Global Capability Center has become an incubator for Indian entrepreneurs.An example is Bhavish Aggarwal. He worked in Microsoft and created India’s Uber -OLA OLA after leaving.
CABS is now building Ola Electric, which may become the world’s largest electric two -wheel car company.
In the 1960s, India was the world’s largest food assistance to accept the country.Environmentalist Paul Ehrlich has predicted large -scale famine in India. A best -selling book claims that there is no enough food in the world to supply all countries in need.A country that can survive.However, the Green Revolution of India in the 1970s proved that this was nonsense.Mumbai Stock Exchange
By 1991, India’s grain was basically self -sufficient, but grain assistance was still needed in the drought year.However, after economic liberalization, India gradually became the main food exporter: In 2022, India exported 22.26 million tons of rice, which was compared to the four major rice exporters after that was, Thailand, Vietnam, Pakistan, and the United States -There are many sums of sums.
The new patent law launched by WTO in 1995. At that time, the opposition party claimed that it would force farmers to pay expensive patent fees and fill the cheap imported agricultural products India, which stifled Indian agriculture.In fact, India’s agriculture has developed very well: Cargill and other foreign breeding companies have become the main suppliers of hybrid seeds, which has promoted the production and export of Indian corn; Monsanto introduced genetically modified cotton, making India a cottonThe main exporter, the export value in 2021 reached a peak of $ 10.8 billion; the new shrimp breeding technology made India one of the world’s largest shrimp exporter.At the same time, India has become the world’s largest vegetable oil importer and important fruit importer.As a result, globalization has expanded India’s exports and imports.
Globalization of financial funds
Until 1991, foreign funds flowing into India were mainly foreign aid and borrowing from public sector enterprises.India banned foreign investors from investing in Indian stocks and bonds. Although this protects the domestic economy that has encountered a sudden stop of capital due to the influence of other Indian families, it also caused India to lose a source of economic vitality.Even after 1991, India also avoided financial liberalization for a long time, but it has gradually liberalized foreign direct investment.
Therefore, the total foreign debt in India increased at a gentle rate, from US $ 84.8 billion in 1991 to US $ 612.4 billion in 2021.This is equivalent to 19.2%of India’s GDP and is one of the lowest proportion in the world.The foreign debt share of government and public sector companies has fallen from almost 100%in 1991 to 20%in 2020.India implements capital accounts for foreigners, but has not yet opened up to Indians.
Prior to 1991, the Indian stock market was notorious in malicious operations, and the Mumbai Stock Exchange was called a snake cave.A stock market scam in 1992 led to major reforms, including replacing paper stocks with electronic stocks in the approved depository institutions (paper stocks are often forged).A new Indian National Stock Exchange is completely electronic, and there is no trading hall -all transactions are automatically matched by the computer, reducing the operation space of illegal behavior.As a result, the Indian stock market has even electronicized earlier than the New York Stock Exchange.The New York Stock Exchange still needs two days to complete the settlement payment after transaction, but India has developed to settle once a day and plans to realize real -time settlement on the same day.This helps India one of the most attractive countries in emerging markets.
There are currently 7,424 listed companies in the two major stock exchanges in India, while Mumbai and Hong Kong are 2079 and 2,597, respectively.The inflow of foreign investment portflows fluctuates greatly, but the largest monthly inflows are US $ 21.7 billion in December 2020.In June 2022, India’s total investment in foreign securities reached US $ 578 billion.Facing the economic anti -wind, India’s toughness made it the darling of global investors in 2022. At that time, the global stock market fell almost: in 2022, the MSCI global index fell 18%, but the MSCI India index rose 4.4%, second only to the second only to the second only to the second only to the second only to the MSCI India index.Brazil ranks second in the world.
Historically, the banking and the bond market mainly provides financing for existing companies to avoid new companies.With the rise of private equity and venture capital funds, this situation has changed, and they now provide new comers with unprecedented billions of dollars.This kind of global capital is patient, so it may share a very rapid growth in the future after a few years of losses.
Global Capital helped India to create more than 100 "unicorn" companies, namely startups with unlisted valuations of more than $ 1 billion.According to the Hurun Global Unicorn Index, the United States led the world with 666 unicorn in 2022, followed by 316 India and 68 India.However, India’s founder also launched 70 unicorn companies overseas (64 of which in the United States). Therefore, the total number of unicorn companies reached 138.India not only benefits global entrepreneurial capital, but also contributes to it.However, with the sharp rise in interest rates in 2022, global funds have become tighter, and many unicorns have lost their unattainable valuations and reducing costs.
Reliance announced that it will invest 75 billion US dollars in the green energy field, especially Green Hydrogen Energy; India Adani (Adani) also plans to invest $ 70 billion in the same field.Their goal is to develop new technologies and reduce the price of green hydrogen energy by two -thirds. Although the risks are also high, the global financial community has expressed support for it.
Indians’ globalization
For more than a century, millions of Indians have been immigration, forming a huge Indian diaspora.In the 19th century, many people went to the Caribbean, East Africa and Southeast Asia as contract workers or businessmen.In the 20th century, due to the rich oil resources of Persia Gulf, millions of people went to the area to meet the demand for labor.In 1965, the liberalization of the United States caused a large number of Indians to flow into the United States.Today, it is estimated that 13.4 million Indian people are temporarily living abroad, and another 18.7 million Indians have become foreign citizens, with a total number of 32.1 million, which exceeds the total population of many countries.
Since thousands of people before 1965, the United States has become the largest destination of Indian diaspora with a population of 4.46 million Indians, of which 3.18 million are now American citizens (Figure 4).Canada has 1.69 million Indian descent.In the Persian Gulf, the United Arab Emirates has 3.42 million Indians, Saudi Arabia has 2.59 million, and Kuwait has 1.03 million.In Africa, South Africa led 1.56 million people.In Asia, Malaysia has 2.99 million, Myanmar is 2.09 million, and 1.61 million in Sri Lanka.
Indian immigrants in the United States have received good education.There is a best -selling book called "Another 1%: Indians in the United States". This refers to 1%of American citizens.In 2021, the median annual income of the family with Indian immigrants was $ 150,000, while the median annual income of all immigrants and American families was $ 70,000.Among Indian immigrants at the age of 25 and over, 80%have at least bachelor’s degrees, and this ratio is about one -third of all foreign and American adults.
Indian immigrants have emerged in politics and business.Rishi Sunak became the British Prime Minister, Nikki Haley and Vivek Ramaswamy, the Republican presidential candidate in the United States in 2024, are Indian people from IndiansThe same is true of Democratic Vice President Kamala Harris. The next US presidential election may become a competition between the Republican and Democratic Indian candidates.Four Indian Americans won the Nobel Prize: Har Gobind Khraana (Har Gobind Khraana), and the Subrahmanyan of Subrahmanyan (Subrahmanyan
CHANDRASEKHAR), chemical Venki Ramakrishnan, and Economics Abhijit Banerjee.
The CEO of the Fortune 500 company has become so common that it has become so common that it will no longer become news.The current and former CEOs include Google’s Sundar Pichai, Microsoft’s Satya Nadella (Satya Nadella), and the Federal Express Raj
Subramaniam), Adobe’s mountain tower tachenu (Shantanu
NaRayen), Ajay Banga, former CEO of Mastercard, the current President of the World Bank), INDRA NOOYI of Pepsi, Vikram Pandit of Citibank, and Parag Agra, Twitter,Parag Agrawal.They enhanced India’s global image and helped instill confidence to foreign investors.
During the Cold War, India was not an alliance country and often tended to the Soviet Union. Therefore, the US foreign policy rarely considered India.It’s different now. The United States regards India as a potential superpower, perhaps the only country in Asia to check and balance India.In 2005, President George Bush lifted a 30 -year ban on nuclear trade with India, and officially allowed India to join the nuclear club.In 2010, President Obama promised to help India get a seat for the permanent member of the UN Security Council.
In the 2022-2023 fiscal year, overseas Chinese remittance reached US $ 107.5 billion in domestic domestic.Even when the global economic panic, exports and other sources of foreign exchange shrink, the remittance of the diaspora is proven to be a stable capital flow and an important economic stability factor.The diaspora is also a major foreign investor in India. In addition to a large investment in Indian stocks and bonds, their bank deposits have reached $ 135 billion.
India sends more than 1 million students overseas each year, of which about 100,000 people go to the United States.Many people did not come back, but those who came back brought back extra skills and improved India’s technical capabilities.Among the R & D personnel of the Global Capability Center of multinational companies, including Indians who returned to China after studying and working in the United States.Therefore, the talent cycle has replaced the so -called talent loss in the past.
Unfinished agenda
Globalization has helped India’s prosperity, but since the Indian People’s Party came to power in 2014, India has begun to dilute or reverse some aspects of globalization and move towards a more nationalist path.Globalization praises the diversity of race and religion, but Hindu nationalism is the opposite.
The Indian Constitution is prohibited from discrimination based on religion, race, species, gender or birthplace. The People’s Party verbally supports this concept, but portrayed India as the product of Hindu civilization, rather than the product that blends with foreign civilization.The Indian People’s Party is amending textbooks and depicting India as a glory of Hindu, and it has been damaged after Muslims and Christians invading.India’s increasingly intensified religious tension situation will inevitably suppress economic growth.
The Indian People’s Party scoffed at foreign experts.When a study from Harvard University showed that the Indian People’s Party abolished the measures of high -faced banknotes in 2016 to damage the Indian economy, Indian Prime Minister Modi claimed that his efforts were better than Harvard, implying that foreign experts were lazy and ignorant.Many Indian economic experts from the United States, including Raghuram Rajan, Arvind Subramanian, Urjit Patel, and Viral Acharya -have been being local economyScholars replaced.
"Swadeshi
Jagran Manch "(advocating the movement of self -reliance in India) has always opposed globalization. Under its influence, Modi announced that India will take" self -reliance "as the goal to reduce imports.It also produces products for foreign markets.18.3%.
The Indian government recently launched a incentive plan linked to production, providing 4-6%of production cash subsidies for the selection company of 14 industrial departments, which replaced the driver of early economic liberalization and adopted to chooseWinners and industrial policies for creating national championships.This brings the risk of skirt capitalism, and it is also possible to create a loss company that India is trying to achieve surge in socialist self -sufficiency.
India and India have always had boundaries. After 2020, India banned 321 Indian applications including Douyin. It also banned the use of Indian 5G telecommunications equipment and tried to reduce imports from India.This is similar to other countries that regard India as a strategic threat. Therefore, India’s de -globalization has both strategic foundations and Hindu nationalist foundations.These economic measures to the country have not yet offset the structural change of globalization before, and the proportion of trade in the GDP and foreign investment inflows still maintain a high level.
The three areas with the most problems in India are education, employment and environment.The quality of the school was extremely poor. In 2009, India participated in the International School Competition (PISA), ranking 72nd among 73 countries.Annual survey shows that although a lot of funds have been invested in education reform, the results of education have not improved, and only 42%of fifth -year students can read the suitable texts in the second grade.
In recent years, India’s unemployment rate has rarely dropped to less than 8%.In 2018, the Indian Railway Corporation announced that there was a vacancies of 90,000 positions, and the applicant exceeded 25 million.In 2016, the town of Amroha issued an advertisement for 114 cleaners, and the results received 19,000 applications, including applicants for engineers and master’s degree in business administration.Economic growth does not create enough high -quality employment opportunities at all. The labor participation rate is only 40%. It is estimated that the urban women’s participation rate is only 6%.These numbers are within the scope of the world’s lowest proportion, which wastes the so -called population dividends in India.
Finally, the quality of India’s air, water, and water -containing layer is very bad.India accounts for 39 of the 50 most polluted cities around the world.The free electricity provided by farmers encourages excessive extraction of groundwater for irrigation, threatening the water content, especially in the northwest of the grain production area in history.*Translation does not represent the view of this agency *The original link, please click "Read the original text"
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