Insight

So What Is Driving INDIA's High Growth Rate??????

Authors:
NISHU JAIN
MBA-1ST SEM

We all have seen the sensex going frenzy beyond any one’s imagination by the inflowing Foreign Indirect Investments(FII). The different sectors like manufacturing sector ,tertiary sector, agricultural etc. all are growing at tremendous pace even though the rate slowed down a bit ,but it is still quite high for an economy .The Indian economy before 1991 was following policies that doomed it to such an extent that India could not finance it, fortnightly imports and exports were very low because of the fixed rate of rupee maintained by the Reserve Bank of India(RBI) that the price of the Indian goods were too costly compared to what other countries had to provide at that time. Then the 1997 economic crisis that engulfed the Asian markets. So suddenly out of no where India bounced back to the spotlight to being the 2nd fastest growing economy of the world and being the 3rd largest economy of the world. What is driving this success of the Indian growth story???

No one may think in that way but it started with the 9/11 attack on the American soil. It sounds weird but there is a link that goes deep into the investors mind. It made them to think that America was not as safe an economy as it seemed in the pre 9/11 era. It made the investors to look outside the American soil for investments and seeking better returns. During this time the Indian economy was coming out of the oblivion, with a stable government in the form of NDA that was giving the Indian economy a new outlook. Also it was the time of the unlikely start of the Industrial Revolution of India, it actually sounds strange but it seems as a fact. The time that Industrial Revolution was spreading around the world (even though mostly European countries and not their colonies) it completely passed over India and also China. So what is going on in India and China is nothing more than the Industrial Revolution of these countries. One may say that China outclasses India in every scenario of the economic factors but one may also have to see the fact that China went on the path of industrialization much before India. China went on the path of rapid industrialization in the year 1977. So if you take the condition of the Chinese economy of the year 1993 i.e. 16 year from 1977 you can easily interchange the name of the two countries and find not much of difference. China may of course be more better developed economically because of the tight government control on the people of China but India being a democracy has its own limitations that limits the governments control over the people.

So who buys this story?? The answer to this question is obviously the whole world. But what is the proof?? Well money speaks for itself. The world has been pouring in the money from their pockets because they realize that the future lies in India and China. But what is really heating up the economy is the large amount if money that is flowing in the economies. Its not a hedge funding sort of thing that just investing a large amount of money for a short period and then taking them away after earning sufficient profit. What is more impressive is the fact that India and China are developing at the best time ever possible with information technology condensing the world to such an extent that it seems as if the whole of the world has been reduced to some sort of a circle because of which transportation of capital is very easy almost a matter of seconds.

So with technology and time on our side their seems to be no bounding of this Indian growth story.