“Local ke liye Vocal”, ”Five pillars of the Economy”, ”Atmanirbhar” these are a few terms we are hearing a lot these days. Will this help revive our economy ? Lets dive into the article but before that a few basic idea on how economies work and some basic terms.
- Inflation : This is linked to how much money is being circulated in the economy, well by printing more money we can all become rich, but to our luck things don’t pan out that way. The amount of money being circulated is equivalent to the amount of gold in the reserve, so for the same amount of gold if we print more bills, the buying power of the currency is said to have reduced this is called inflation.
- Currency Devaluation : It is the downward adjustment of a country’s currency against another currency. By doing so the a weak domestic currency makes a nation’s exports more competitive in global markets, and simultaneously makes imports more expensive. It seems nonsensical but it sometimes lies in the best interest of the country, It is done to achieve the following objective Increasing Trade, Decreasing the trade deficit and to reduce sovereign debt.
Now that you have a fair idea of these terms, Let’s dive in
The story starts of with US and USSR being fierce competitors on all fronts space, technology etc followed by the cold war and the USSR and rise of China as a major communist power in the world, well China being a communist country with strict rules being implemented might be a cause for rise of COVID-19, that will be a story for another day.
The fire of cold war extinguished now US and its allies wanted to open up the economies to bolster foreign trade, this led to that start of the modern day globalization and many countries like India refused to open up their economy as they thought it would hamper the development of indigenous product and China having witnessed a opportunity here, attracted many foreign companies by providing them human and natural resources at a very cheap price making it a major player in the world marketplace
By doing so China got a lot of investors in their country and they also took it to their advantage, The country with the help of the foreign companies learnt about their own technology by reverse engineering this lead to many new state owned Chinese firms being created and they took over a lot of these foreign companies. According to the American Enterprise Institute’s China Global Investment Tracker.
Chinese companies have ploughed a staggering $2 trillion into foreign businesses and construction projects since 2005, buying up everything from prestigious banks and hotel chains to major energy producers.
In the early 90’s India’s finance minister Dr. Manmohan Singh decided to slowly open up the economy, he started it of by opening up the telecom industry to lower the prices by doing this TI was the first MNC to establish a manufacturing facility in India. In a short while, in 1994 HealthScribe an collaboration between Indian and American doctors was set up in Bangalore to provide transcribe facility to American hospitals. Here the doctor in America would dictate medical notes into a Dictaphone and this was then transmitted to India where a student or housewife would transcribe and upload it in the system, the 12hr time difference ensured that when the doctors were sleeping in America the workforce were efficiently digitizing it and when the doc is up, he has the reports in his system.
It was in the end of the 20th century India started creating the global economy and its leadership was determined to carve a place for itself in the world, with the onset of Kargil war and the Pokhran missile test was destined to change the face of the nation. With America imposing a lot of sanctions, India had to finally give in to opening up its economy completely. But to counter that there was a lot of bureaucracy involved in setting up companies in India.
It was only then luck started favoring India on two fronts . Fiber optic linking was done between India and US this ensured faster data transmission and the Y2K problem. Y2K problem is also called the millennium problem because when computers were built it had a internal clock and in order to save memory it was made out of 6 digits(dd/mm/yy)rather than 8 digits(dd/mm/yyyy). so when it was the year 1/1/2000 the computer would take it as 1/1/00 implying 1/1/1900, this meant that the existing systems and new ones had to be reconfigured. This was a huge task
Which country had enough techies to do this job?
INDIA (well the youth of the country have to put to use the degrees earned at IIT’s and other prestigious institutes. )
This made India venture into the field of outsourcing and for the first time it was about to compete with China on the ground of labor costs and quality. To counter this move China had started to devalue its currency and started Investing in various foreign firms, It was only at that time China started to loose its sheen.
After the Singh Govt. A govt run by a tea seller, a govt that was formed by a landslide victory in the national election, a govt which transpired to change the face of India among the international community, a govt which put INDIA first, came into power.
Perhaps it was the first time in a long time a PM hailed from the grassroots of India and maybe that’s why he was appealing to the masses, well that and his banter against the opposition and his catchy phrases and great story telling made CM into a PM in 90 days through Varanasi.
Initiatives such as ‘Make in India’ and ‘Swachh Bharat’ put a smile in the face of the people of the country, but counter initiatives like demonetization and CAB-NRC and the fact that the ruling party being associated with the saffron color made investors start doubting about the safety of their investment and thereby neglect the potential of the Indian Market.
But in recent days major companies backing out of their investments in China over fears of the virus and the fact that the Indian government is being more cautious and systematic in tacking the virus has enhanced the image of India to the world.
There are a lot of opportunities for India up for the grabs
- US dollar to be eclipsed as the world currency -World bank
In the advent of the virus and the way the US economy has been performing in the recent years, US not having the reserve to back up the cash in circulation put the USD at a high risk.
It is time for a “responsible globalisation”, in which decision-making was shared between the old powers and developing countries such as China and India.
Robert Zoellick - World bank President 2009.
- China being non-transparent in its policies related to COVID-19
In the past 20 years many of the pandemics can be traced back to the China and them being non-transparent put a lot at stake for investors and this is where India can come into picture, the ease of business index in India has risen significantly over the past few years and being one of the countries to have weathered the 2008 rescission is definitely a selling points of the county. - In the pharma front
India produces 60 per cent of the world’s vaccines and accounts for 60–80 per cent of the United Nations’ annual vaccine procurement. A number of Indian companies have also helped over the years to produce and distribute vaccines to the world. India is already leading the war against COVID-19, India being a country where the largest vaccine manufacturing facility exists (SII, Pune ) and other alternative medicine are also being explored. We might not have a world class health care facility being provided to its citizens, but we do have a world class pharma industry set up in the country.
Well with all that said lets hope for the best and put our hands together cooperate with the govt and help them to help us.
References
The world is flat by Thomas Friedman
