Indian Economic History

Topics: India, Human Development Index, International Monetary Fund Pages: 8 (2341 words) Published: October 10, 2013
The Dragon and the Elephant: India and China
in the Asian Century


Essay Topic No 1
“It is the context and circumstances prevalent in any nation that should determine its policies and strategies of growth” (Mahtaney, 2010, p. 159). Illustrate the truth or falsehood of this statement with reference to either India or China _____________________________________________________________________ “An ounce of practice is worth more than tons of preaching” (Mahatma Gandhi, 1946).

Economic thought is an ever-adapting philosophy, which has been ‘preached’ by many differing schools of thought throughout the centuries. In this current global economic context, the majority of worldwide economic strategies and polices adhere to the neo-liberalism ideologies of deregulation, privatisation, financial and trade liberalisation (Mahtaney, 2007, p. 4). These guiding principle policies were firstly introduced with the creation of the Bretton Woods Conference in 1944 after the conclusion of the Second World War. The significance of the Bretton Woods Agreements, in regards to India’s journey to economic growth and development, is that it set the world stage up for global adoption of liberalism and capitalist ideologies. Although the Bretton Woods System eventually collapsed in 1973, global regulatory institutions of the liberalisation agenda such as the World Bank, the International Monetary Fund (IMF) and the World Trade Organisation (WTO) still exist today. Interestingly, the Bretton Woods Agreements were primarily discussed among the world’s leading political and economic delegates representing forty-four nations. However, the main perspective and interests offered at the Conferences was that of the Western World, most notably the United States, Great Britain and France. A result of the Western World dominating the reconstruction of a war torn global economy, was the distinction between the developed and developing nations became 2

increasing apparent. In response to the emergence of economically inefficient and undeveloped nations such as India, the West once again ‘preached’ a liberalised economic strategy known as the Washington Consensus in 1989, which was supported by the World Bank, the US Treasury and the IMF. However, the Western solution for the developing world did not prove to be successful, what did in fact produce economic efficiency was a heavily regulated and centrally planned economy which occurred with the Indian Independence in 1947. For over five decades, the Indian government slowly ‘practiced an ounce’ of liberalisation rather than completely opening up their economy to globalisation and the free market. A result of this protectionist strategy is that modern India maintains the second steadiest average growth rate of 5.5% annum, behind China at 7.4%, mainly though the growth in the service industries (Gupta, 2009, p. 219). The failure of the Washington Consensus alludes to the notion that one single economic formula, which does not consider a nation’s context, religion, social cohesion, geography, economic and political interests, simply cannot be efficient.

Taking into consideration the context of the world economy today, the developing world is undeniably heading towards a significant transformation with India being one of the leading nations to transition into and dominate the global economy. As Mahtaney asserts:

“India is a superpower waiting to happen. The odds are stacked in her favour, the challenge is to ensure that this is the case for a long time to come” (Mahtaney, p. 18).


India has been characterized as the outsourcing service centre of the world for business process operations and clinical research activities of global corporations. However, India’s journey to success is considered unorthodox in that whilst it leads with economic growth, it continues to be characterized by deprivation and social inequalities such as poverty and a high infant morality rate. Furthermore,...
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