India

1
India
Molly Cal
Ryan Teagen Jon
2
Historical and Cultural Background

• Worlds 2nd largest population
• Religion
• Hinduism 80 of population
• Islam
• Christianity
• Buddhism
• Jainism
• Sikhism
• Estimated 100 different languages

3
Historical and Cultural Background

• Hinduism Influence
• Caste System
• Brahmins-socially elite Kshatriyas-the warrior
  caste, Vaisyas the commercial caste, 20
• Sundras, the peasant group, 40
• Untouchables, technically are outside the system
  and are subordinate to the other castes 20
• Caste System abolished after independence from
  Britain in 1947. Still persists in most rural
  areas.
• British Influence
• Inspired model of heavy industrial growth
• Strong protectionism

4
Economic Policy Since Independence

• Independence in 1947
• Pro-Free Market Industrialists, large landlords
• Pro-Socialist Group Labor unions, intellectuals,
  peasants.
• Mostly market capitalist society.
• 1950 Move towards indicatively planned socialism
  lead by the first Prime Minister Jawaharlal Nehru.

5
Jawaharlal Nehru

• Four Main Motivations
• 1) Firm secular nationalism
• 2) Strong belief in political democracy
• 3) Attachment to Gandhian ideals of nonviolence
  and egalitarianism
• 4) Support for the Soviet model of socialist
  planning to achieve heavy industrial growth and
  self-sufficiency

6
Move Toward Central Planning and Socialism

• Fabian socialism Quasi-Socialism
• Import Substitution Policies
• 1951 License-Permit Raj
• System of licenses and permits for private
  industries that was expanded to an enormous set
  of regulations and controls.
• 1969 Expanded further, controlling the size of
  firms in various industries.
• 1973 Expanded even further, controlling access
  to foreign exchange by firms for importing inputs.

7
Five Year Plans

• Nine plans total 1951-2002
• First, 1951-1956 Keynesian-style model, emphasis
  on infrastructure and agriculture.
• Second, 1956-1961 Soviet approach, push towards
  heavy industrial expansion, growth of the
  state-owned sector.
• Third, 1961-1966 Continuation of the Second,
  more emphasis on foreign exchange flows and
  consumption sector.

8
Indira Gandhi

• Nehrus daughter
• Became Prime Minister in 1966
• Reintroduced the Five Year Plans in 1969
  beginning with the Fourth.
• Fourth, 1969-1974 Major wave of nationalizations
  and increased regulation of the private sector.
• Fifth, 1974-1979 Effort to reduce poverty by
  targeting consumption levels of the poor.
• Sixth, 1980-1985 Focused on increasing exports
  with relaxed import restrictions on high-tech
  inputs for export industries.

9

• Seventh Plan, 1985-1990 Continuation of the
  sixth, relaxation of market regulations and
  foreign borrowing led to high growth rate.
• Hiatus without plans 1990-1992
• Eighth and Ninth Plans, 1992-2002 Less emphasis
  on sectoral planning targets, focus on fiscal and
  monetary policy with major market deregulation.
• Overall, the plans have been indicative rather
  than command.
• Large waves of nationalizations between 1969 and
  1974. Sporadic nationalizations through 1984.
  Finally, by 1995-1998 the private sector share
  had moved ahead of the SOE share.

10
Economic Reforms

• Narasimha Rao became the new prime minister after
  Rajiv Gandhis assassination in 1991.
• Government faced a severe balance-of-payments
  crisis.
• Narasimha announced substantial reforms that
  would reduce budget deficit and inflation.
• Reduced tariffs and import restrictions
• Removed its remaining import quotas
• Relaxed limits on FDI
• Reduced the reservation system
• Reformers hoped to replicate the superior
  economic performance of the East Asian tigers.

11
1991 Reforms resulted in a noticeable increase in
the economic growth rate
12
GDP GROWTH RATE
World Bank 2007
13
INFLATION
14
GNI PER CAPITA
15
Income Inequality
CIA World Factbook 2009, Rosser and Rosser 2004
16
Remaining Development Challenges

• High birth rates
• Widespread illiteracy
• Extreme poverty
• Regional variation
• Inadequate public infrastructure

17
Social Development Indicators for Asian Countries
Birth Rates per 1,000 population for 1992
Infant mortality rates per 1,000 live births for
1997 Adult female literacy rates are percentages
above age 15 for 1997 Percent urban population
for 1998 Sanitation access is percent of
population for 1995.
18
Remaining Development Challenges

• In order to overcome these issues, India needs
  develop reforms that strive to improve the
  quality of life for its population.
• By providing sufficient infrastructure to address
  these issues, a foundation will be built for
  further growth and development within the
  country.