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India's Economy, 9/1/07
Key Lecture Points:
• The Indian economy, with an over one half billion person workforce, is the 2nd fastest growing economy in the world (2nd to China), growing at a rate of 9.2% in 2006. India, long pictured as a primarily agricultural economy, has lately come to be a global force in industry and in services (particularly information and communication services). Whereas the 20th century saw the economic rise of the US, Germany and Japan, observers are heralding the 21st century as the era in which India and China will come to dominate the global economy.
• Interestingly, India’s 20th-century foray into socialist economics parallels that of China’s. Like China, India was a ally of the Soviet Union during the Cold War and put in place those governmental economic controls characterisitic of ‘command’ economies (not really surprising given previous decades of economic exploitation by the British on the capitalist model). A currency crisis in 1991 spurred reform of the Indian economy on a more market-based model. ‘Structural adjustment’ mandated by the World Bank led to the liberalization of markets in goods, services and capital, fostering rapid but uneven growth and India’s growing economic linkages to the rest of the world.
• Despite India’s rapid reforms and subsequent national-level economic growth, Indians are some of the poorest people in the world—perhaps a reflection of the new emphasis on urban industry and services, at the expense of agriculture which still sustains the vast majority of India’s population. Indeed, the beginning of the 21st century has brough waves of suicides by Indian farmers overburdened by enormous amounts of debt. The urban-rural divide has been complemented by other economic challenges, like environmental degradation, growing energy requirements, and the influential caste system.
• Indian economic relations with the US in the 2nd half of the 20th century were tense, with India being an ally of the Soviet Union during the latter half of the Cold War. Today, the US and India enjoy extensive trade and investment relations. However, these growing links are accompanied by economic tensions, like those over outsourcing and agricultural subsidies.
Exploration Questions:
• What are the major ways in which the three centuries of British Colonialism continue to affect India?
• What do you see as the greatest challenges to India’s economy? How can India’s leadership face those challenges?
• In what ways is “outsourcing” helping the Indian economy?
Reflective Question:
• Have you ever traveled to India? If so, what was your experience.
• Are there elements of the Indian civilization that intrigue you? The food? The dress? The architecture?
• Have you seen or heard the effects of “outsourcing”? Tell your story.
For More Information:
• US State Department Country Background Notes on India: http://www.state.gov
• Great general background and historical info: www.indianchild.com
• Congressional Research Service: http://fpc.state.gov
• BBC on the British East India Company’s operations in India: www.bbc.co.uk
Books For Further Reading:
• Keay, John. India: A History. Grove/Atlantic, 2001. 608 pages.
Description: This book chronicles five thousand years of South Asian history, from the first Harrapan settlements on the banks of the Indus River to the recent nuclear-arms race.
Click here to order.
• Bhagwati, Jagdish. India in Transition: Freeing the Economy. Oxford University Press, 1993. 128 pages.
Description: Bhagwati, a world-renouned economist, recounts here India’s economic development process, with a special emphasis on the relation between politics and development policy. Bhagwati’s account of Indian policy since independence will be a biased one, given his leanings toward free-market economic policy and affinity for economic globalization.
Click here to order.
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