Economic Development

The issue :  Indias’ economic liberalization

“Prosperity is the ability of an individual, group, or nation to provide shelter, nutrition, and other material goods that enable people to live a good life”.  According to this definition, India is not prosperous.  India has tried to follow socialist ideology in economic policy since independence which has proved to be detrimental to the welfare of its population.  There are several million homeless, and those with shelter are even battling to get electricity and clean drinking water.  Since the early nineties, India has had some change in economic policy enabling companies like Suzuki to manufacture cars in India.  Even though India has taken steps to liberalize its economy, capital has not flown into India as per predictions and assurance from the western liberal school.  

Prosperity is achieved by economic liberalization, however there are other factors to be considered when making policy.  India has poor infrastructure, which makes it difficult to conduct everyday business.  Government, even though treading down the path of a liberal economy in recent times, still has in place some restrictions that hinder investment.  A lack of sound organisation limits the flow of capital and finally, there is a lack of a skilled workforce.

India has proved unable to attract foreign investors because of its’ poor infrastructure.  There is a lack of roads and the ones that do exist are pitted with holes and ridden by cows and pedestrians.  The electricity, which hasn’t been privatized does not supply twenty fours hours a day, making it impossible to establish heavy industry.  The water is filthy and undrinkable.  The sewerage system is dubious.  The are several shanty towns making the morale low.  These factors contribute to the inability of India to attract foreign capital.

India has some restrictions in its’ policy which deter investors.  Large industries are not allowed to come into India, establish operations and take all their profits out of the country.  People can sell dollars to get rupees, however rupees do not buy dollars.  Money exchange is strictly controlled.  The government wants the foreign technology to come into India.  It is by no means anti-innovation.  It is by no means restricting foreign capital from pride.  India just wants the profits to stay in India, because it needs the money to stay in India.  India is offering a 51% to 49% partnership to the favor of herself in order to have control over its economy.  India does all this so that Indians will prosper, however it has scared away the investors as they feel the government is unstable.

India is not well organized which is a deterrent to investment.  There is no supply chains organized for efficient logistics.  There is no well organized marketing that establishes the environment where trade is easily conducted over the communication network.  As there is low education within the country, it is difficult to get competent staff to manage complexity effectively.  India is failing to attract foreign capital precisely because of the lack sound organization.

As there are over a billion people in India, it has been difficult to educate everyone to an adequate standard.  It is extremely difficult to ensure that one billion people are educated as there are a range of other problems that have to be addressed too.  There is a lack of a common language to communicate with.  India’s population is diverse and there is a lack of English speaking people.  As people are homeless and hungry, it makes it difficult to make English proficiency a priority.  As there is a lack of a skilled workforce, investors have been reluctant to invest.

The reading addressed property as the core issue around economic development, however there are several other factors that need to be considered.  Poor infrastructure, legitimate government protectionism, inability to use the slave of technology to connect investors with traders, entrepreneurs and local industry and finally a lack of an adequate workforce ready to capitalize are all issues that haven’t been addressed effectively by a failing leadership.  It is not about changing the mental model, as the reading suggests, but more about the inability to recover from Imperialism!