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The Transformation of the Indian Economy

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Gopika Jem

on 28 June 2013

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Transcript of The Transformation of the Indian Economy

Path of Transformation
Colonial India
Post - Independence (1947)
Post Liberalization (1991)
Still faces problems...

The Transformation of the Indian Economy
1773 - 1947
Property Rights given to the British
Established Railways, Telegraphs, Common Law
Frame a new constitution
Integrate States
Formulate a redevelopment plan
Develop independent foreign policy
High tensions between social strata
India established mixed economy
Private sector owns and operates small to medium sized businesses
Industries and most other services handled by the government.
Inward looking import substitution model inspired by ideology of close ally - Soviet Union
Transportation, Communications and Social Services entirely state-run.
High protectionism and government intervention
large public sector and business governance
Central planning
Progress was SLOW...
Growth rate stagnated 3.5 %
Other Asian countries enjoyed much higher growth rates and standards of living
Balance of Payment problems led India close to deficit.
Foreign Exchange Reserves were diminishing and the country was left with the value of 2 weeks worth of imports.
IMF intervened with loan of $2.2 billion
Call for a political and economic overhaul to stimulate growth in the economy.
Abolished Licence Raj which
included licenses and regulations which were required to set up a business in India.
Granted automatic approval of FDI in many sectors.
Freedom to determine scale of businesses
Freedom to fix prices
Reduction in tax rates
Simplified process of foreign capital and foreign technology.
Reducing role of public sector and increasing the role of the private sector.
Improvement in management of enterprises by introducing competition from the public sector.
Services and businesses ran with greater efficiency, generating higher profits.
Free flow of goods and capital in all countries.
Free flow of information and technology in all countries
Combined with educated workforce, investment in IT and software industries and the growth of outsourcing and communication technology worldwide

IT Boom
Software Industry
Increased FDI
Rising Consumption due to growing middle class
Population: 1.2 billion
World's 3rd largest economy accoding to OECD
No longer growing at 9% growth as witnessed 2 years ago.
Slowed down to around 6%
Thriving, young and educated population.
Monet Painting
High Inflation even when wages and employment low.
Insufficient job opportunities leading to a Brain Drain.
Labour regulations diminish opportunity for job creation.
Lack of infrastructure widens the already gaping inequality gap (Sen)
Depreciation of the Rupee
Thank you for listening.
Full transcript