Information Technology On India

Published Date: 02 Nov 2017

"Nations’ progress and prosperity is reflected by the pace of its sustained economic growth and development. Investment provides the base and pre-requisite for economic growth and development. Apart from a nation’s foreign exchange reserves, exports, government’s revenue, financial position, available supply of domestic savings, magnitude and quality of foreign investment is necessary for the well being of a country. Developing nations, in particular, consider FDI as the safest type of international capital flows out of all the available sources of external finance available to them"(Hooda).

"Long years ago we made a tryst with destiny, and now the time comes when we shall redeem our pledge. At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom" (Nehru). The post independence period was highlighted by poor economy, and the government had an enormous task in reviving an economy suffering from the constraints of imperialism. With India's interest in mind, "Nehru exercised his strong political leadership and began to work towards a goal of economic development with a non-alignment perspective" (Sundrum, 11).

Since independence the Indian government has attempted to pursue a mixed economic policy with features of both a free market and socialist planning. Major industries such as railroads, automobile manufacturing, and banking are government run. At the same time, many consumer-goods industries and agriculture are in private hands. The center of the planned economy has been a series of five-year plans fostering state takeover of the former British colonial economic structure.

"By 1991, the economy of India had reached complete crisis status. Agricultural and industrial production was low, growth had collapsed, inflation was high, and the black market constituted one half of the official economy" (Foianini). "In 1991, India represented 15% of the world's population and less than 1% of world trade" (Kulkarni, 4). "The economy was stagnant and those 700 million people relying upon the agricultural sector were in total destitute. The flaws in protectionism were seen and felt by everyone.

Dr. Manmohan Singh, India's Finance Minister in 1991, was the man who would lead the project to liberalize the Indian market. He possessed a vision of liberalization for India. Singh's goal for India was better export performance and more efficient industrialization through the opening up of markets" (Foianini). Manmohan Singh "recognized the importance of international competitiveness in an increasingly interdependent world" (Ahluwalia and Little, 4).

"With foreign investment and expanded trade, India gained huge improvements in information technology" (Foianini). "The opening up of India's borders allowed for a decade of tremendous growth during the 1990's, making India the second fastest growing economy in the world by 2004, second to the Chinese economy" (Kulkarni, 13).The ultimate goal of economic reform should be to increase the standard of living for the poor; a goal that India has yet to reach.

Looking at the positives impact of information technology on the Indian society, "The information technology industry is exploding. A study done by McKinsey & Co. and the National Association of Software and Services Companies, an Indian software lobby group, estimates that in the next five years, India's technology industry will employ nine million young workers" (indianembassy.org). "Software exports from Bangalore increased over 52% to reach 6% billion in April, 2005" (Kulkarni, 15). "In 2009, Indian GDP based on purchasing power parity stood at 3.5 trillion dollar making it India the fourth largest economy. Its service industry accounts for 62.5% of the GDP while the industrial and agricultural sectors contribute 20% and 17.5% respectively. Its average GDP growth from 2004 to 2010 was 8.40% reaching an historical high of 10.10% in 2006. The GDP expanded 8.9% in the third quarter of 2010" (Economic Survey).

In spite of the recent developments, the critics argue that the information technology has created a created a disparity of income, and has bought about the segregation of society broadening the social divide of the Indian society. The current situation highlights the flawed system outlining the functioning of the Indian social order. Since independence, only a select few have languished in the glory of globalization, and harvested the prosperity of international trade. Meanwhile, the other half of the country is languishing in the dark ages of poverty, still struggling for their rights to basic amenities.

"In India today there is a harsh division between social groups. The growth of the technological sector has caused an increase in the inequality of income" (Foianini). "The rural poor still constitute India's majority with 700 million people relying on the agricultural sector. They are being driven off of their land to make way for growing industry and business" (Drèze). "Outsourcing from Western countries has created a flood of new jobs for the middle class, further widening the gap between the middle and low classes" (Foianini).

The success enjoyed in the information technology sector has made the government brash in its function. The result of these arrogant missteps has led the government in making flawed economic decisions to bring about reforms that threatens the very social realms of the society. The article titled Retail Reforms Is in the Doing, published in The Indian Express, highlights the development made by the Indian government in the multi-brand retail sector aiming to bolster Foreign Direct Investment at the backdrop of economic slowdown. The slow pace of decision-making on foreign investment by the government, and the inability of policy makers to bolster growth and interest by foreign investors have led the domestic economy to slow down, which eventually led to the Rupee being the third worst performing currency in the last fiscal year.

The turn of events has resulted in the government pushing economic reforms to bolster the slow growth rate, and make much needed funds available for socio economic development. In the wake of the parliament gunning down the proposal of increasing the FDI of multi-brand retailing to 51% last fiscal year, the development has frustrated many international investors, and has restricted the entry of Wal-Mart and IKEA into the Indian markets.

During the current summer session of the Indian parliament, the coalition United Progressive Alliance (UPA) government pushed hard to implement these economic reforms, at the back drop of several of its allies exiting the coalition government, leaving the UPA government to minority in the assembly. In the wake of the mockery that outlines the Indian political system, the critics of these economic reforms point out the potential dangers the Indian markets would face with the implementation of these deregulations.

The first question I asked myself was if the ideology of capitalism is based on free market theory, then why do we still have regulations in a capitalistic free market? According to Korten, who authored When Corporation Ruled the World, claims that a pluralist form of government, where there are many voices that conflict with each other’s ideologies, helps in everyone’s opinion being heard, and it translates to a better functioning of the political establishment. But in this scenario, has the pluralist form of democracy truly helped the Indian economy, or has just made it lackluster in policing making?

This further led me to question myself as to whether do democratic regimes delay economic reforms? Is this economic reform creating a division amongst the various classes? Given the lackluster performance of the government in pushing economic reforms, will India be a preferred investment avenue for foreign investors in the future? Who benefits from the current economic reform? The locals, government, or co-operations? And why?

In my own opinion, living in the world’s largest democracy, I believe that a pluralist form of government doesn’t necessarily translate into better functioning of the political establishment. Given the grim condition of Indian politics, where enforcing a certain economic policy against the demands of a select few has translated to a slow decision process which has eventually led to the foreign funds drying up in the Indian markets. Given the sheer volume of the various political parties representing various factions of the society, enforcing a policy against the wishes of a select few has always been a stumbling block in getting the policy approved by the parliament, which has further led to coalition governments collapsing, leaving the country in a turmoil.