Businesss Environment

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India has emerged as a leading exporter of services, software and information-technology products. Many companies such as Wipro, TCS, HCL Technologies, Tech Mahindra have worldwide fame.

Thus the new economic policy is taking India towards liberal economy or market economy. It has relieved India much of her hardship that she faced in 1990-91.

To get relief from such economic problem the government of India had only two ways before it:

- To take foreign debt and to create favorable conditions within the country for increasing the flow of foreign exchange and also to increase the volume of export.

- The other was to establish fiscal discipline within the country and to make structural adjustment for the purpose.

Hence the governmen

SWOT of Indian economy

Strengths Huge pool of labour force

High percentage of cultivable land

Diversified nature of the economy

Huge English speaking population, availability of skilled manpower

Stable economy, does not get affected by external changes

Extensive higher education system, third largest reservoir of engineers

High growth rate of economy

Rapid growth of IT and BPO sector bringing valuable foreign exchange

Abundance of natural resources

Weakness Very high percentage of workforce involved in agriculture which contributes only 23% of GDP

Arround a quarter of a population below the poverty line

High unemployment rate

Stark inequality in prevailing socio economic conditions

Poor infrastructural facilities

Low productivity

Huge population leading to scarcity of resources

Low level of mechanization

Red tapism, bureaucracy

Low literacy rates

Unequal distribution of wealth

Rural-urban divide, leading to inequality in living standards

Opportunities

Scope for entry of private firms in various sectors for business

Inflow of Foreign Direct Investment is likely to increase in many sectors

Huge foreign exchange earning prospect in IT and ITES sector

Investment in R&D, engineering design

Area of biotechnology

Huge population of Indian Diaspora in foreign countries (NRIs)

Area of Infrastructure

Huge domestic market: Opportunity for MNCs for sales

Huge Natural gas deposits found in India, natural gas as a fuel has tremendous opportunities

Vast forest area and diverse wildlife

Huge agricultural resources, fishing, plantation crops, livestock

Threats Global economy recession/slowdown

High fiscal deficit

Threat of government intervention in some states

Volatility in crude oil prices across the world

Growing Import bill

Population explosion, rate of growth of population still high

Agriculture excessively dependent on monsoons

Globalisation in India:

India became independent as one of the poorest countries of the world. The British colonial rule had destroyed the self-sufficient agrarian economy. Prime Minister Jawaharlal Nehru preferred mixed economy for planned economic development of the country. Public sectors were set up along with a number of private enterprises. But like the socialistic model of economy, the mixed economy of India has not produced profitable results.

A number of public sectors became sick and the growth rates of production had begun to fall. The government was compelled to sanction subsidy to make the price of some essential commodities low, despite the rising burden on state exchequer. While the poverty of the people continued to grow to an alarming extent, there was an acute balance of payment crisis. Due to low domestic savings, there was no adequate capital for investment.

There was also shortage of resources to provide educational and health facilities to a large growing population. Moreover, there was high rate of inflation and the balance of payment deficit was around $10 bn. In such a situation P.V. Narsingh Rao government was compelled to introduce the policy of liberalisation and privatisation. Dr. Manmohan Singh, the then finance minister was instrumental in the adoption of new economic policy in 1991.

Local Response to Globalisation:

The process of globalisation carries with it various positive and negative consequences. It has been interpreted in two contradictory ways—firstly as an opportunity to develop in economic sphere and secondly as a challenge to the age-old cultural identity of India. On the basis of such contradictory perceptions, the local response to globalisation can be analyzed in two ways.

INDUSRIAL POLICY

Some of the objectives of Industrial Policy are as follows!

At the time of independence, India had an extremely underdeveloped and unbalanced industrial structure. Industries contributed less than one sixth part of national income.

The country did have some industries like cotton textiles, jute and sugar, but there were virtually no basic, heavy and capital goods industries on which programmes of future industrialisation could be based.

Whatever major industries were there, they were largely concentrated in a few areas such as Bombay. Surat, Ahmedabad. Jameshedpur, Calcutta, Delhi etc. While the rest of the country remained industrially neglected.

Thus