India as an Emerging Market - Case Study Example

I. Introduction II. Global overview of India III. Characteristics and challenges of India IV. Trade, investments and migration markets V. Ideologicalfactors VI. Economic factors VII. Political factors and their impact on India and Global Environment VIII. Conclusion I. Introduction The year of 1991 marks a turning point in the history of independent India. The minority Congress government of Narasimha Rao at the center initiated a paradigm shift in the politics and economics of the country. The drastic policy changes introduced in 1991 were more or less inspired by the laissez-faire capitalism and neoliberalism of models such as “Washington Consensus”, “Structural Adjustment Plan” and “New World Order”. It is nothing but the adoption of this “New Economic Policy” that paced the integration of Indian economy with the global market and constitutes a rupture with the past (Sengupta, 2008). From then, most of the things pertinent to India, be it of social, economic, political or cultural, have undergone profound transformations as India became an emerging superpower with a vibrant market and a growing population. This paper intends to introduce briefly the internal and external realities of contemporary India and its strengths and prospects vis-à-vis the rest of the world. To understand India as an emerging market, the paper would examine a variety of interrelated but distinct factors such as its social and economic indicators, trade and markets, place in the international system and its unique political and cultural aspects. II. Global overview of India In the years of the so-called Hindu Growth Rate, India had been seen as a “caged tiger”. As the ruling regime in India introduced market reforms and free market policies, the global perception of India acquired a new turn from a pessimistic overview to an optimistic but critical appraisal. India has been praised from around the corners for not only being the largest democracy but also the only surviving postcolonial state, which has a history of free elections and democratic rule except the brief period of 1975-77 Emergency. The preamble of Indian constitution declares India as sovereign, socialist, secular and democratic republic and importantly promises social, economic and political justice. Therefore, India is constitutionally a modern social democratic state with a strong emphasis given to ‘socialistic pattern of development’ (Basu, 1994). The Directive Principles of State Policy delineated in the part IV of the Indian constitution upholds the notion of an active welfare state which could intervene in the social, religious, and cultural affairs of the country in order to ensure progress. Indian federalism is of a mixed type in which states and the centre effectively wield power distinct areas. However, the centre has supreme power in many areas including the power to dismiss the elected governments at the state level in terms with article 356. For Basu (1994), although federal system is the basic structure of the government of the country, a strong mixture of unitary bias is apparent. The Panchayati Raj system is a unique characteristic of Indian polity. Kashyap (2002) is of the view that “the seventy-third and seventy-fourth constitutional amendments have made some fundamental changes in our political structure and in the status of local institutions”. Thereafter, governance has been considerably decentralised through panchayats and other institutions of local governance. Although India has a strong economy and an young, vibrant work force, it is still long behind in terms of human development. Health remains an unresolved issue, over half of the children in the country are malnourished. One third of the population still faces chronic hunger. Majority of the population lives with less than a dollar per day. In literacy rate, India is even behind some of the poverty-ridden sub-Saharan countries. And, the gender and regional gap in terms of education is frightening. In other words, the success in the economic realm has been not translated into others spheres of life. III. Characteristics and challenges of India India’s population now is more than 113 crores. According to the National Commission on Population, the demographic transition in India has been relatively slow but steady. The birth and death rates in India have significantly come down from above 40/1000 to less than 25/1000 in the period of 1901 to 2001. However, there are significant interstate differences in the population growth rate. Five states from North India with 44% of Indias population in 1996 will contribute 55% of population growth in the period 1996 to 2016 as per the population projections by the National Commission on Population, India. The seasonal operations in the agrarian sector in India causes unemployment a fluctuating phenomenon. According to the results of National Sample Survey(1999-2000) only seven percentage of the workforce is employed in the formal sector while 83% are meagrely employed in the unorganised sector. The unorganised sector or informal sector is mainly composed of agricultural labour which highly exploitative and uncertain. In the organised sector, the state and the various public institutions remain as the principal employer. However, the ability of state and Public Sector Units for employment generation has significantly weakened as the current neoliberal policy regime focuses on liberalisation and privatisation that is expressed in the disinvestment drive on Public Sector Units. . IV. Trade, investments and migration markets From 1991 onwards, India generally follows free trade policies as advocated by World Bank And IMF. India has entered into various free trade agreements with many countries. The adoption of unbridled free market policies have led to an agrarian crisis which took the lives of thousands and thousands of farmer’s lives. P. Sainath, the rural affairs editor of ‘The Hindu’ have reported that more than 150,000 have committed suicide in the first fifteen years of the new millennium as a result of debt and deeply entrenched agrarian distress. India has a policy of creating Export Processing Zones aimed at attracting foreign investments and export promotion through tax exemptions and incentives (Gopalakrishnan, 2007). Recently, the concept of Special Economic Zones which is borrowed from China has been at the centre of the development discourse in India. While arguing against creating Special Economic Zones for attracting foreign direct investment, Gopalakrishnan (2007) indicates that “ the new investment into SEZs’ will not in fact be 100,000 cores” as it was projected by the Commerce Ministry at the centre. V. Ideological factors Democratic socialism was the prevailing ideology in India since the independence. Even the independence struggle was closely associated with the ideals of democratic socialism of various hues. Theorists such as Vanaik (2000) has pointed out that democratic socialism as the one of the major component of ‘Nehruvian Consensus’ which triumphed until the paradigmatic changes occurred in 1991. On the other hand, Fascist ideology too has a strong presence in the Indian polity as Hindutva communalism and casteism. However, Indian politics has been ideologically centric. Indian culture is profoundly influenced by the notion of homo hierarchus that is derived from the caste system. The caste system is unique to India in which graded inequality is legitimate. The norms and values of Hindutva are also being propagated widely as part of Indian culture such as the reproduction of Brahmanism. On the other hand, there arguments concerning western cultural imperialism that irreversibly transforms the Indian culture by changing the lifestyles of the booming middle classes. VI. Economic factors According to Sengupta (2008) “the basic features of the economic paradigm introduced in 1991 are now firmly entrenched, having survived multiple changes in government”. The changes at the centre has not been changes in the economic policies. The neoliberal policy Besides the parlance of high economic growth, there exist zones of backwardness and poverty in India wherein the normal writ of the constitutional government simply does not run. Maoist and separatist movements are running their own parallel governments in many areas of the country where they have their own paradigm for governance. For instance, Chattisgarh and Naga borderlands have their own parallel governments. Goswami and Miklian (2008) assert that such areas are characterised by “anaemic administrative structures, lack of basic law enforcements mechanisms and security, absence of economic development, alienated and humiliated peoples, and human rights violations”. The problem is that the economic development in India is lopsided and uneven. The benefits of economic growth, in reality, have not sufficiently trickled down as argued by the neoliberal theorists. In addition, the poor is forced to bear the negative consequences of the booming industrialisation process in which the governments forcefully acquire land from farmers and small peasants and diverts it for Special Economic Zones or Industrial parks. VII. Political factors and their impact on India and Global Environment According to Chandra et.al (2000), the basic features of the Indian Constitution are “the supremacy of the constitution, the republican and democratic form of government, the secular character of the Constitution, the separation of powers between the legislature, executive and the judiciary and the federal structure”. All these ideals have helped to consolidate India as a nation from the vestiges of colonial British India. Based on these constitutional provisions which are integral to the constiturion and thereby not alterable, are the pillars of Indian democracy. Importantly, the Directive Principles of State Policy as upheld in the constitution have major say in the pattern of economic development in India even after the liberalising of the economy. Still, all the land in India is owned by the state and sate could forcefully take over the land from proprietors if it deems necessary. On the other hand, directive principles necessitates the state to provide basic welfare to all. Indian political system now is characterised by multipolarity. Regional players have more say over the national policy matters. Coalition governments have become a sort of inevitability. On the other hand, the civil society in India is being strengthened and widens the realm of politics. The role of media in India so significant because it has a leading role not only in the making of public policy but also the public opinion and discourses on politics. VIII. Conclusion To conclude, it is possible to argue that India has developed its potential to be a superpower in the twenty first century. Nevertheless, its prospects for further industrialisation and development are being belittled by a variety of systemic problems such as corruption and illiteracy. Indian market is certainly emerging from the vantage point of having a giant internal market. But, caste, communalism and terrorism and Maoist and separatist violence have a significant role in the weakening of the internal market of India. Furthermore, all the areas of Indian economy have not been sufficiently integrated to the world market. The mirage of combine and uneven development causes the founding of new forms of inequality in an already inegalitarian society. Still, the availability of an industrious labour force in the youth and rapid economic growth make India one of the most attractive emerging markets in the developing world. Bibliography Basu. D. D. (1994). Introduction to the constitution of India. Eds. New Delhi. Prentice-Hall of India. Chandra. B. et.al.(2000). India after independence. New Delhi. Penguin. Gopalakrishnan. S. (2007). In the name of growth: The politics and economics of India’s Special Economic Zones. Accessed on. 24/11/08. Available at: http://sahati.com/wpcontent/uploads/2007/05/in_the_name_of_growth_final_with_changes.pdf. Goswami. N. and Miklian, J. (2008). India’s violent internal dissent. Economic & Political Weekly. May 24. Kashyap. S. C. (2002). Our constitution: An introduction to India’s constitution and constitutional law. New Delhi. National Book Trust, India. Kaviraj. S. (2004). Politics of liberalization in India. in Bromely. S. et.al (2004). Making the international: Economic interdependence and political order. (ed.) London. Pluto Press. Chp.6. pp. 133-171. Facts. National Commission on Population, India. Accessed on 26/11/08. Available at. http://dget.nic.in/dex/empscenario.pdf. Sengupta. M. (2008). How the state changed its mind: Power, politics and the origins of India’s Market Reforms. Economic & Political Weekly. May 24. Read More