By the time the 19th centurycame about, Great Britain had become the dominant politicalpower on the subcontinent. Due to so many years of nonviolent resistance toBritish rule, which was led by Mohandas GANDHI and Jawaharlal NEHRU, ultimatelyresulted in Indian independence. The Indian Independence was granted in 1947. Alarge amount of communal violence was taking place both before and after the countryseparated and turned into two different countries, India and Pakistan. The nations,in which surrounded India and Pakistan, have fought around three separate warsfor their own independence. During the final war, which was in 1971, allowedfor East Pakistan to become the separate nation, in which is now known as Bangladesh.During the year of 1998, India conducted nuclear weapons tests, as well asemboldened Pakistan to conduct their own tests that same year. In the year of2008, terrorists, who originated from Pakistan directed a series of coordinatedattacks in the country which is known as Mumbai.
Mumbai is considered to be India’sfinancial capital. Despite India having a significant overpopulation,environmental degradation, extensive poverty, and widespread corruption; aneconomic growth was able to follow the launch of the economic reforms, whichtook place in 1991. As well as a massive youthful population are helping todrive India’s emergence as a regional and global power. India has a population ofaround 1,281,935,911 individuals, according to the Central IntelligenceAgency, “consists of Indo-Aryan 72%, Dravidian 25%, Mongoloid and other 3%”.
Indiais developing into an open-market economy, yet traces of its past autarkicpolicies remain. In the country of India there are several economicliberalization measures, which include “industrial deregulation, privatizationof state-owned enterprises, and reduced controls on foreign trade andinvestment, beginning in the early 1990s and served to accelerate the country’sgrowth, which averaged nearly 7% per year from 1997 to 2016” according to theWorld Fact Book. In 2011 India’s economic growth began to slow down due to adecline in investments.
The reason for this decline is being caused by highinterest rates, rising inflation, and investor pessimism because of the government’scommitment to further economic reforms and about slow world growth. With thebeginnings of rising macroeconomic imbalances and the improvements of economicconditions has led investors to shift capital away from India. With this takingplace it has prompted a sharp depreciation of the rupee in India.According to Schumpeter:Making Money in India, “if you run a big firm in India you muststraddle different worlds.” When you first read this, your first thought mustbe how could this be? Of coarse we have a different perspective than the peoplein India do because our countries are different. India has a very poorinfrastructure, as well as a huge informal economy; because of this millions ofthe customers in India can only be reached by traveling through dirt tracks.What most people would find most surprising about the Indian bosses is thatthey would be having wheat grass shots in Silicon Valley, slug down bootleggedsingle malts with a local politician, as well as sip on masala chai from claycups with villagers, this is because there are shiny new campuses that arebuilt beside open sewers.
India’s gross domestic product(GDP) is actually the world’s seventh-largest and its stock marketthe ninth-biggest, but the country is like no other major economy, as we cansee from the above statements regarding the country. According to Schumpeter:Making Money in India, “the informal sector accounts for about 50% of output,80-90% of jobs and at least 90% of firms”. As you can see from just the fewstatements, India is both a terrible and brilliant place to do business, buteven knowing this the countries informality and poor infrastructure is creatingobstacles for new entrants. It would take around ten to twenty years forindividuals to build a dense national supply chains and distribution networks.
Yes, it does take along time to do so in the United States, it is much moredifficult to do so in India. According to Schumpeter:Making Money in India, “anew value-added tax, known as the GST,requires firms to reconcile their tax returns with those of their suppliers andcustomers, forcing millions of companies into the tax net.” With this out come beingput into place it has made it much riskier for businesses to hoard illicitcash. Recently parts of India have created new digital identities, allowing foropen bank accounts.
Even though this has happened, parts of the country haveseen a 13% increase in formal savings (bank deposits, life insurance, mutualfunds). Even though this is happening in parts of the country are still behindin advancements, and courts have a backlog of around 30 million cases. For all the companies that arestill laying in the shadows (shoe-factories, plywood manufacturers,drinks wholesalers supplying roadside stalls) they will soon be cut out fromall the legal supply firm chains, but if they do decide to become a legal businesstheir tax costs will go up and may crash form the payments. Therefore, in thelong-run, according to Schumpeter: Making Money in India, “firms may be hurt bybetter-functioning markets for capital, land, and natural resources, as well asmore efficient supply and distribution chains.”